Good day, ladies and gentlemen, and welcome to the First Quarter 2012 Hawaiian Electric Industries Earnings Conference Call. My name is Stacy, and I’ll be your conference moderator for today. At this time, all participants are in a listen-only mode. We will conduct a question-and-answer session towards the end of the conference. (Operator Instructions) As a reminder, this conference call is being recorded for replay purposes. I would now like to turn the presentation over to Ms. Shelee Kimura, Manager of Investor Relations and Strategic Planning. Please proceed.

Thank you, Stacy, and welcome to Hawaiian Electric Industries’ first quarter 2012 earnings conference call. Joining us this morning are Connie Lau, HEI President and Chief Executive Officer; Jim Ajello, HEI Executive Vice President, Chief Financial Officer and Treasurer; Dick Rosenblum, 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 of the quarter and an update on our strategy. Jim will then update you on Hawaiian’s economy, our results for the quarter and outlook for the remainder of the year. Then, we will conclude with questions and answers. Forward-looking statements will be made on today’s call. Please reference the accompanying disclosure to the webcast slides located on our website. I’d now turn the call over to our CEO, Connie Lau.

Thank you, Shelee, and aloha to everyone. We are off to a good start in 2012 with our performance tracking against 2012 objectives. At the utility, there were many constructive regulatory actions since the start of the year. With all three utilities now decoupled under Hawaii’s regulatory framework. Our bank continued to deliver solid performance. Profitability metrics remained strong, credit quality improved and our loan portfolio grew for the sixth consecutive quarter even as we remix the portfolio away from loan mortgages to control interest rate risks. Our bank remains one of the better performing banks in its class across the country. Hawaii’s economy continues to improve albeit slowly and we remain cautiously optimistic about continued economic recovery going forward. We continue to make progress on our strategies and believe we are well positioned to continue to deliver attractive risk adjusted returns and earnings growth to our investors. First quarter 2012 earnings were $0.40 per share, up from $0.30 per share in the same quarter last year primarily reflecting a recovery of cost approved for our Oahu utility in July of last year. As you can see on slide four, there has been positive momentum in our utility with numerous decisions rendered by the Hawaii Public Utilities Commission in just the few two months. Most notable were the final decisions in Hawaii Island and Maui County 2010 test year rate cases, which implemented decoupling. We are pleased to be able to report that all our utilities are now on the regulatory model. Jim will discuss the impact of our recent regulatory decision shortly. On the clean energy front, out utility remained focused on integrated more renewable energy into our system, diversifying our fuel sources by adding renewable can stabilize customer bills in our jurisdiction, which increased approximately 40% in the…

Thanks, Connie. As a backdrop to our results and outlook, I’ll briefly comment on Hawaii’s economy, which continues its gradual improvement. The tourism industry, a significant driver of Hawaii’s economy, maintained a positive growth trend that started almost two years ago. Year-to-date March, visitor arrivals were up 7.8% and expenditures were up 12.5% compared to last year. March was the 23rd consecutive month of a year-over-year growth and expenditures. And the 2012 outlook for the visitor industry remains positive. Local economists expect construction to begin its gradual recovery in 2012 due to an increase in non-residential and public sector projects. Overall, we continue to be cautiously optimistic about the continued recovery of Hawaii. At the utility, net income for the first quarter of 2012 was $27.3 million, compared to $19.2 million in the first quarter of 2011. The main driver of the net income improvement was $7 million attributable to the recovery of cost for our Oahu utilities reliability in clean energy investment. Operations and maintenance expense was slightly lower in the prior year largely due to lower A&G expense of $2 million after tax from the change in the capitalization of costs which was effective with the July 2011 HECO interim position. In addition, there were two unusual O&M items that net to $1 million after tax increase. An increase in the reserves for environmental cost of $2 million offset by the reversal of $1 million of deferred costs that were previously expensed in 2011. Our O&M outlook for the year remains at 6% higher than 2011. At the Bank, net income for the first quarter of 2012 was $15.9 million compared to $13.9 million in the first quarter of 2011. The $2 million improvement was primarily due to $1 million higher non-interest income due to higher gains on…

Thanks, Jim. We are pleased with the strategies we adopted in 2008 to focus on instituting fundamental changes and our two operating businesses are working well and delivering improved results. Our utility continues to focus on successfully fulfilling it’s clean energy role in our state and achieving returns that will enable us to compete for capital and fund the upfront investments necessary to support Hawaii’s move to clean energy. And all three of our utilities are now fully decoupled under our state new regulatory model to encourage this transition to clean energy. At the Bank, we maintained gains from our performance improvement project and continue to deliver high performing results and we are on track to meet our 2012 target. Our dividend yield remains attractive and above the average for utility peers. As of yesterday’s close our dividend yield was 4.6% and 2012 will mark our 111th year of paying continuous dividend. We believe we are well positioned to continue to deliver a unique investment combination of attractive earnings growth with reduced risk and volatility and an above average dividend yield. And now we look forward to hearing your questions.

(Operator Instructions) Your first question comes from the line of Asshar Khan with Visium. Please proceed. Ashar Khan – Visium: Hi. Good morning. I just wanted to go over this slide 11, if I can, I guess, I am just trying to get a sense of the positives and the negatives for the rest of the kind of the year. So I’m right, the 6% higher O&M right, we had flat O&M for the first quarter is that still expected in the remaining three quarters, is that equal to something like $24 million or something or could you quantify that?

Sure. It’s Jim Ajello. I will start by saying that yes, the short answer is that we expect to have a 6% O&M increase year-over-year. Ashar Khan – Visium: Okay. And Jim is that equate to like $24 million or my number wrong?

It is very close to that number, yes. You’re correct on that. Ashar Khan – Visium: Okay. And then we would have the MECO rate case right that would be in effect starting like July 1, like so you would get something more than half of that in additional revenues in the last half of the year, is that correct?

That is correct. Ashar Khan – Visium: So that’s not in one of these bullets or am I might missing it somewhere or it’s in the top bullet. Is that what is the MECO...?

The reference on slide 11 to the very first point is the MECO. Ashar Khan – Visium: Okay, the MECO thing. Okay. Okay, and is this the update interim the $5.5 million is that incremental or is that just the same of what we had before?

This has changed its likely $5 million is incremental. Ashar Khan – Visium: So that’s incremental that’s what I thought, so that’s incremental this year, and that started when January 1, or when did that start?

That started in the beginning of the second quarter. Ashar Khan – Visium: So that’s...

$5.5 million this obtained release to the recovery of remaining cost for the East Oahu transmission project. It was the second quarter item. Ashar Khan – Visium: That’s second. Okay. So that will show up in the second quarter going forward?

Correct.

Correct. Ashar Khan – Visium: Okay. Okay. And then next bullet if I can just follow through is the, you said there is revenue reduction of $4.4 million, but $2.3 million is depreciation. So from earnings perspective, it’s only a negative $2 million, is that correct?

This is Tayne. In terms of how to look at that, it’s really offsetting, it’s not a negative because lower rate increase is equal to the lower depreciation expense. In other words, we didn’t need the revenue to cover that lower depreciation expense. So it’s a net income item. And then also the other piece of that is the lower ROE, as decoupling begins, so yes, it does go down by about $2 million, but then we do have decoupling mechanism that will kick in. Ashar Khan – Visium: That will make the kick in. Okay. Okay. Okay. So the RAMs are all positive, right, the 5.7% is like a positive, starting from June, right, that’s additional revenue, right?

Yes. That’s right. Ashar Khan – Visium: Okay. Okay. So if one and then if am I right the higher CapEx that should lead to higher AFUDC or no?

Yes, as we build out the project there is FEVC on that. Ashar Khan – Visium: On that. Okay, okay. So I am just trying to get a sense as we look at I guess the last three quarters we do an additional subtraction. It seems like you told earnings should still be able to go up, am I missing something or wrong?

I think what you are missing there is a couple of items write-off and then (inaudible) to add anything. As you know on that slide 11, in the – now that we have the HELCO’s final decision that will reset the heat rate and we had been getting heat rate savings previously because we had installed the theme unit, that was very efficient since the last rate case. So those heat rate savings will go away with the rest of the heat rate in the rate case. And then as we talked about before we have a very large customer information system that is going in for all three utilities. The actual cut over gate is scheduled for a Memorial Day weekend and once that goes into service we then would have to recover those costs through the normal rate case process which now is every three years on a segregate for each utility. So that will be a dragon so we can get it into each rate case. I would just say or clarify (inaudible) Jim that the – we estimate the reduction in the heat rate associated with the deadband is about a $3 million item just to put a number on that. And then to add to what Connie said, both the CIS system and the $32 million of CT-1 expense are still pending regulatory audit or review so the timing of the recovery of those has been uncertain now because there is no precise schedule for those review yet set up.

And CIS is a $60 million figure. Ashar Khan – Visium: Okay, okay. Connie, now you’ve gotten I guess decoupling in all three jurisdictions if I am right? You had mentioned that you would think about giving – introducing guidance once you achieve that. Any thought on that process?

Ashar, because we just got the final decisions in last week. We actually don’t have an update for you today. And that is something that we are looking at doing. And we will likely talk about in the next webcast. Ashar Khan – Visium: Okay, okay. Thank you so much.

Your next question comes from the line of Jim Krapfel with Morningstar. Please proceed. James Krapfel – Morningstar: Hi, good morning to you there in Hawaii.

Good morning. James Krapfel – Morningstar: It looks like 12 month trailing ROE at MECO declined about 130 basis points quarter-over-quarter. What drove that and then where do you expect ROEs to trend at MECO once the new rate case revenues go into seg later this year.

This is Tayne. In terms of the ROE it’s a lower trending and you see that downward that’s not because we are awaiting the MECO 2012 rate increase decision that we talked about expected sometime later this month, so that’s main reason for that. Thereafter we do except the ROE to popup a bit in 2012. James Krapfel – Morningstar: Okay. Maybe what rate do you expect? Monsoon rates are into effect, what ROE you can generate?

It’s Jim Ajello. We don’t provide that particular information, but the allowed ROE is now across all three utility units are at 10%. So our goal is to obviously achieve as much as we possibly can of those allowed ROE. James Krapfel – Morningstar: Okay. Great, thanks.

(Operator Instructions) Your next question comes from the line of James Bellessa with DA Davidson. Please proceed. James Bellessa – DA Davidson: Good morning.

Good morning Jim. James Bellessa – DA Davidson: The key HECO lease setting of the heat rate that savings was found in what line item up to now?

Jim, that was in HELCO of Hawaii Electric Light on the bigger Island. James Bellessa – DA Davidson: Right. And what line item does that savings show-up, and is it a revenue item or its opposite to expense item?

It shows as an opposite to an expense item, your fuel expense. James Bellessa – DA Davidson: And there is customary information system going in on September a total cost of $60 million was it is there an expense of operating that system that isn’t building your numbers?

Just a correction, Jim it’s actually going to go into use after Memorial Day weekend so that will be June and then I will let Tayne talk about the operating cost of that.

The operating cost is associated with a system where not included in the 2011 rate case and so those costs are part of the costs that we are in terms of the increase for the remainder of the year. When we talk about – as part of that 6% increase. James Bellessa – DA Davidson: Is it an all NIM expense built in and not built into the $145 million that you guys are putting up.

Jim, I am sorry – 145 million. James Bellessa – DA Davidson: I thought you have an expense – excuse me – with the 6.6% increase in O&M expenses for the utility is what you were talking about.

Yes. That was the approximate $24 million figure we talked about earlier.

This is Dick Rosenblum, that extra O&M for our customer information system is in that 6%, it is not incremental to the 6%. James Bellessa – DA Davidson: Thanks for that clarification. The slide number 17 talks about non-performing assets and non-performing asset ratio. I went through your Q, didn’t even find that concept in your Q, isn’t that required at that point and need to be put in to discuss the Bank’s operations.

Jim, I am sure we must have that in there and we can give you the reference to that. James Bellessa – DA Davidson: Thank you very much.

Sure.

And with no further questions in the queue. I would like to turn the call back to management for closing remarks.

Thank you, everyone for joining us today and if you have any follow-up questions, as always please feel free to reach out to me. Thanks so much. Bye.