HEI - Hawaiian Electric Industries Inc.

08/07/2025 | Press release | Distributed by Public on 08/07/2025 14:18

Quarterly Report for Quarter Ending June 30, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion updates "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in HEI's and Hawaiian Electric's 2024 Form 10-K and should be read in conjunction with such discussion and the 2024 annual consolidated financial statements of HEI and Hawaiian Electric and notes thereto included in HEI's and Hawaiian Electric's 2024 Form 10-K, as well as the quarterly condensed consolidated financial statements and notes thereto included in Item 1 of this Form 10-Q.
HEI consolidated
Recent developments. On August 8, 2023, a number of brush fires in the West Maui (Lahaina) and Upcountry Maui areas caused widespread property damage, including damage to property of the Utilities, and 102 confirmed fatalities in Lahaina (the Maui windstorm and wildfires). The Maui windstorm and wildfires were fueled by extreme winds and drought-like conditions in those parts of Maui.
Effective November 1, 2024, HEI and Hawaiian Electric entered into two definitive settlement agreements (collectively, the Settlement Agreements) to settle the tort-related legal claims in the litigation arising out of the Maui windstorm and wildfires (expressly excluding securities and derivative actions) on a global basis without any admission of liability. Under the Settlement Agreements, HEI and Hawaiian Electric are obligated to contribute a total of $1.99 billion (out of a total defendant contribution of approximately $4.04 billion), which includes $75 million previously contributed for the One 'Ohana Initiative(a humanitarian aid fund to provide payments outside of litigation to the beneficiaries of those who died, as well as compensation for personal injury damages). The total settlement amount is to be divided between two settlement funds, one for the benefit of individual plaintiffs, and the other for the benefit of the class plaintiffs. Additionally, under the Settlement Agreements, HEI and Hawaiian Electric are obligated to contribute a share to the settlement administration fees only if certain other sources are exhausted when those fees are due, for which, $3.5 million was accrued as of June 30, 2025, based on the best estimate at that time.
The Settlement Agreements contain multiple conditions that must be met before any payment from HEI and Hawaiian Electric to the settlement funds are due. Those conditions include, among others, resolving claims of the insurers (either through agreement or a final court order stating that the insurers cannot maintain independent lawsuits against the defendants if the Settlement Agreements become final) and court approval of the Class Settlement Agreement. The Hawaii legislature passed a bill appropriating money from the state, and Governor Josh Green signed it into law on July 8, 2025, satisfying the condition related to the State's appropriation of funds. The condition related to court approval of the Individual Settlement Agreement has also been satisfied.
The foregoing descriptions of the Settlement Agreements do not purport to be complete and are qualified in their entirety by reference to the full text of the Settlement Agreements attached as exhibits to the Form 8-K that was filed with the SEC on November 5, 2024. Also, see Note 2 of the Condensed Consolidated Financial Statements for more information.
HEI and Hawaiian Electric determined that making payments under the terms of the Settlement Agreements in four equal annual installments is the most viable option and have classified the first $479 million installment as a current liability based on expected timing of the payment and the remaining $1.44 billion as a noncurrent liability on HEI's and the Utilities' Condensed Consolidated Balance Sheets as of June 30, 2025. The Settlement Agreements contain no admission of any liability by HEI or the Utilities and reflect the collective efforts of the State, HEI and the Utilities, and other defendants to seek a comprehensive resolution of the litigation arising out of the Maui windstorm and wildfires. The Utilities have recorded an additional $40 million in "Accounts receivable and unbilled revenues, net" and "Other accounts receivable, net" on HEI's and the Utilities' Condensed Consolidated Balance Sheets, respectively, as of June 30, 2025, based on the amounts expected to be remaining under the applicable insurance policies at the time of settlement payment.
In an effort to finance the first settlement payment, on September 25, 2024, HEI completed the sale of 62.2 million shares of common stock. The shares were issued under a registration statement registering up to $575 million of common stock. The net proceeds from the sale of common stock amounted to approximately $557.7 million. From these proceeds, HEI transferred the amount of the first payment, $479 million, into a new subsidiary, GLST1, which is restricted from disbursing such funds except in connection with the initial payment to the settlement funds. In addition, on September 19, 2024, HEI filed with the SEC a shelf registration statement for an at-the-market offering program under which HEI may offer and sell, from time to time at its sole discretion, its common stock, without par value, having an aggregate offering price of up to $250 million. To date, HEI has not sold any common stock under this program. HEI is working with its financial advisors on additional financing plans to raise capital necessary to fund the remaining $1.44 billion settlement amount.
The Company is also named in securities class action and shareholder lawsuits related to the Maui windstorm and wildfires. The parties have engaged in mediation efforts that are ongoing. There is no assurance that the Company will be successful in the defense of the litigation or that insurance will be available or adequate to fund any potential settlement or
judgment or the litigation costs of the action. The Company is unable to predict the ultimate outcome and is unable to make a reasonable estimate of the amount or range of loss, if any, that could result from any unfavorable outcome.
For further discussion of the impacts of inflation and other macro-economic factors impacting the Utilities, see "Recent Developments" in the Electric utility section below. See also "Economic conditions" below for further discussion of the economic impact of recent events.
RESULTS OF OPERATIONS
Three months ended June 30 %
(in thousands) 2025 2024 change
Primary reason(s)1
Revenues $ 746,392 $ 795,417 (6)
Decrease in the electric utility, partly offset by an increase in the all other segment.
Operating income (loss)
53,747 (1,661,589) NM
Increase due to recordation of $1.71 billion of tort-related claims in the prior year period at the electric utility.
Income (loss) from continuing operations for common stock
$ 26,085 $ (1,249,697) NM
Higher income for the electric utility due to the recordation of tort-related claims in the prior year period.
Loss from discontinued operations
- (45,787) NM
Increase related to the sale of the bank segment in December 2024.
Net income (loss) for common stock
$ 26,085 $ (1,295,484) NM
Higher net income related to the recordation of tort-related claims for the electric utility in the prior year period and the sale of the bank segment in December 2024.
Six months ended June 30 %
(in thousands) 2025 2024 change
Primary reason(s)1
Revenues $ 1,490,462 $ 1,587,431 (6)
Decrease in the electric utility, partly offset by an increase in the all other segment.
Operating income (loss)
116,167 (1,610,702) NM
Increase due to recordation of $1.71 billion of tort-related claims in the prior year period at the electric utility.
Income (loss) from continuing operations for common stock
$ 52,756 $ (1,228,509) NM
Higher income for the electric utility due to the recordation of tort-related claims in the prior year period.
Loss from discontinued operations
- (24,853) NM
Increase related to the sale of the bank segment in December 2024.
Net income (loss) for common stock
$ 52,756 $ (1,253,362) NM
Higher net income related to the recordation of tort-related claims for the electric utility in the prior year period and the sale of the bank segment in December 2024.
1 Also, see the all other segment discussion below.
NM - Not meaningful.
The Company's effective tax rates for the first six months of 2025 and 2024 were 27% tax expense and 26% tax benefit, respectively. The Company's effective tax rates for the second quarter of 2025 and 2024 were 34% tax expense and 26% tax benefit, respectively. The effective tax rates for the second quarter and first six months of 2025 were higher than the comparable periods in 2024 primarily due to the recapture of investment tax credits which was partially offset by the impacts of the substantial pre-tax loss in the second quarter of 2024 resulting from the Utilities' accrual of the loss contingencies related to the wildfire tort-related claims.
Maui windstorm and wildfires related expenses, net. For the three and six months ended June 30, 2025 and 2024, the Company's incremental expenses related to the Maui windstorm and wildfires as discussed in Note 2 of the Condensed Consolidated Financial Statements, were as follows:
Three months ended June 30, 2025 Six months ended June 30, 2025
(in thousands) Electric utility All Other segment HEI Consolidated
Electric utility
All Other segment
HEI Consolidated
Maui windstorm and wildfires related expenses:
Legal expenses $ 4,304 $ 1,584 $ 5,888 $ 8,153 $ 6,585 $ 14,738
Outside services expense - 11 11 - 135 135
Other expense 5,792 67 5,859 11,487 300 11,787
Interest expense 660 210 870 2,412 489 2,901
Total Maui windstorm and wildfires related expenses
10,756 1,872 12,628 22,052 7,509 29,561
Insurance recoveries1
3,620 (1,202) 2,418 556 (4,860) (4,304)
Deferral treatment approved by the PUC2
(9,889) - (9,889) (15,572) - (15,572)
Total Maui windstorm and wildfires related expenses, net of insurance recoveries and approved deferral treatment
$ 4,487 $ 670 $ 5,157 $ 7,036 $ 2,649 $ 9,685
Three months ended June 30, 2024 Six months ended June 30, 2024
(in thousands) Electric utility All Other segment
HEI Consolidated4
Electric utility
All Other segment
HEI Consolidated4
Maui windstorm and wildfires related expenses:
Legal expenses $ 17,613 $ 6,568 $ 24,181 $ 28,348 $ 10,777 $ 39,125
Outside services expense
997 399 1,396 1,781 737 2,518
Wildfire tort-related claims 1,712,000 - 1,712,000 1,712,000 - 1,712,000
Other expense3
5,741 1,139 6,880 14,882 1,334 16,216
Interest expense 2,524 862 3,386 6,431 1,780 8,211
Total Maui windstorm and wildfires related expenses
1,738,875 8,968 1,747,843 1,763,442 14,628 1,778,070
Insurance recoveries
(16,379) (2,496) (18,875) (26,348) (5,104) (31,452)
Deferral treatment approved by the PUC2
(7,656) - (7,656) (15,554) - (15,554)
Total Maui windstorm and wildfires related expenses, net of insurance recoveries and approved deferral treatment
$ 1,714,840 $ 6,472 $ 1,721,312 $ 1,721,540 $ 9,524 $ 1,731,064
1Includes adjustments related to costs that are no longer probable of recovery under insurance policies. For the three and six months ended June 30, 2025, adjustments amount to $6.6 million, of which, $4.0 million was deferred to a regulatory asset and is reported in the "Deferral treatment approved by the PUC" category above.
2 Related to the PUC's order, received on December 27, 2023, approving deferred accounting treatment for the Utilities' incremental non-labor expenses related to the August 2023 Maui windstorm and wildfires incurred through December 31, 2024. Pursuant to the PUC order received on February 12, 2025, deferral accounting treatment limited to insurance premiums and outside services and legal costs associated with the asset-based lending facility credit agreement incurred in 2025 was granted. Applicable amounts were deferred to a regulatory asset. See "Risk Factors" in Item 1A. for further discussion of regulatory risks. See Note 2 of the Condensed Consolidated Financial Statements.
3Includes $3.9 million ($2.8 million by the Utilities) and $10.6 million ($9.5 million by the Utilities) pursuant to an agreement to settle indemnification claims asserted by the State of Hawaii, for the three and six months ended June 30, 2024, respectively. See Note 2 of the Condensed Consolidated Financial Statements.
4Excludes expenses related to discontinued operations amounting to $0.5 million and $0.3 million for the three and six months ended June 30, 2024, respectively.
Note: All Other segment Maui windstorm and wildfires related expenses - legal, outside services and other are included in "Expenses-Other" and interest expense is included in "Interest expense, net" on the HEI and subsidiaries Condensed Consolidated Statements of Income. See Electric utility section below for more detail.
From August 8, 2023 through June 30, 2025, HEI and its subsidiaries have incurred approximately $2.2 billion of Maui windstorm and wildfires related expenses, including the Utilities' estimate of the losses related to a settlement of all wildfire tort-related legal claims and cross claims and the One 'Ohana Initiativecontribution. Certain of these costs are reimbursable under excess liability insurance, professional liability and directors and officers liability insurance policies. As of June 30, 2025, HEI and its subsidiaries have approximately $11 million, nil and $120 million of insurance coverage remaining under the excess liability, professional liability and directors and officers liability policies, respectively, after deducting applicable retention amounts, amounts that have been recovered under insurance policies (including the One 'Ohana Initiativecontribution), and amounts expected to be recovered for incurred costs and recognized as a receivable as of the quarter end.
With the Company accruing its losses related to a settlement of all wildfire tort-related legal claims and cross claims as of June 30, 2025, the Company expects the Electric utility and HEI to use the remaining $11 million of insurance coverage under its excess liability policy primarily for legal expenditures, in excess of amounts deferred, in connection with the Maui windstorm and wildfires.
Economic conditions.
Note: The statistical data in this section is from public third-party sources that management believes to be reliable (e.g., Department of Business, Economic Development and Tourism (DBEDT), University of Hawaii Economic Research Organization (UHERO), U.S. Bureau of Labor Statistics, Department of Labor and Industrial Relations (DLIR), Hawaii Tourism Authority (HTA), Honolulu Board of REALTORS® and national and local news media).
In the second quarter, the average daily passenger count was 2.4% higher than the comparable period in the prior year. The recovery in total passenger counts from the low levels in 2020, which occurred under COVID-19 restrictions, thus far has been driven by domestic travelers, with international travelers, including Japanese travelers, remaining at lower levels. In the second quarter, international visitor arrivals (excluding Japan) remained 22.1% below 2019 levels. Due to the weak yen, Japanese visitors are 41.4% below 2019 levels.
Hawaii's seasonally adjusted unemployment rate in June 2025 was 2.8%, slightly lower than the June 2024 rate of 2.9%. The national unemployment rate in June 2025 was 4.1%, the same as June 2024. According to a recent forecast by UHERO, issued on May 9, 2025, jobs in the state will increase by 0.8% in 2025 before decreasing by 0.8% in 2026.
Hawaii real estate activity through June 2025, as indicated by Oahu's home resale market, resulted in a 0.5% decrease in the median sales price for condominiums and an increase of 6.0% for single-family homes compared to the same period in 2024. The median single-family home price was $1,125,000 in June, slightly lower than the all-time high of $1,185,000, set earlier this year in February. The number of closed sales through June 2025 saw a 6.0% decrease for condominiums and a 2.1% decrease for single-family residential homes compared to the same period in 2024.
Hawaii's petroleum product prices relate to the crude oil in international markets. The price of crude oil has decreased 19.7% over the same quarter in the prior year.
At its June 18, 2025 meeting, the Federal Open Market Committee (FOMC) decided to maintain the federal funds rate target range at 4.25% - 4.5%. The FOMC noted continued uncertainty around the economic outlook, and their attention to risks on both sides of its dual mandate of achieving maximum employment and 2 percent inflation over the longer run. The Federal Reserve stated that it will continue to reduce its holdings of Treasury securities, agency debt, and agency mortgage-backed securities.
UHERO forecasts full year 2025 real GDP growth of 1.1%, a decrease in total visitor arrivals of 2.2%, an increase in real personal income of 0.9%, and an unemployment rate of 3.1% for the state. According to UHERO, Hawaii's economic outlook has taken a turn for the worse due to federal policies and actions resulting in limited Hawaii GDP growth in 2025 and a mild recession in 2026. Recovery is expected to be slow, and UHERO notes that risk remains exceptionally large.
See also "Recent Developments" in the "Electric utility" section below for further discussion of the economic impact of recent events.
All Other segment. The "All Other" business segment net loss includes results of the stand-alone corporate operations of HEI, ASB Hawaii, GLST1 and Pacific Current.
Three months ended June 30
(in thousands) 2025 2024
Change
Primary reason(s)
Revenues $ 3,910 $ 3,086 $ 824
The revenues for the second quarter of 2025 were higher than the comparable period in 2024 primarily due to higher sales at Pacific Current1subsidiaries.
Operating loss (10,797) (17,149) 6,352
The second quarters of 2025 and 2024 include $2.1 million and $4.0 million of operating loss, respectively, from Pacific Current primarily due to Hamakua Energy's and Mahipapa's facilities being shut down for repairs in the prior year period resulting in lower revenues and higher expenses in the prior year period. Corporate expenses for the second quarter of 2025 were $4.7 million lower than the same period in 2024, primarily due to lower wildfire legal and other expenses.
Net loss (13,065) (20,303) 7,238
Lower interest expense (due to $384 million paydown in April), higher interest income and the same factors cited for the change in operating loss above. Also see effective tax rate explanations above.
Six months ended June 30
(in thousands) 2025 2024
Change
Primary reason(s)
Revenues $ 9,614 $ 6,522 $ 3,092
The revenues for the first six months of 2025 were higher than the comparable period in 2024 primarily due to higher sales at Pacific Current1subsidiaries.
Operating loss (24,314) (29,617) 5,303
The first six months of 2025 and 2024 include $7.3 million and $9.5 million of operating loss, respectively, from Pacific Current1 primarily due to Hamakua Energy's and Mahipapa's facilities being shut down for repairs in the prior year period resulting in lower revenues and higher expenses in the prior year period. Corporate expenses for the first six months of 2025 were $3.4 million lower than the same period in 2024, primarily due to lower wildfire legal and other expenses.
Net loss (34,210) (38,336) 4,126
Higher interest income, lower interest expense (due to $384 million paydown in April) and the same factors cited for the change in operating loss above, partly offset by loss on sale of Hamakua Holdings on March 10, 2025. Also see effective tax rate explanations above.
1 Hamakua Energy's sales to Hawaii Electric Light (a regulated affiliate) up until the close of its sale on March 10, 2025, are eliminated in consolidation.
The "all other" business segment loss includes results of the stand-alone corporate operations of HEI (including eliminations of intercompany transactions), GLST1 and the results of Pacific Current, a direct subsidiary of HEI focused on investing in clean energy and sustainable infrastructure projects. Significant investments of Pacific Current made through its subsidiaries include: Pacific Current's indirect subsidiary up until the close of its sale on March 10, 2025, Hamakua Energy, which owned a 60-MW combined cycle power plant on Hawaii Island that provides electricity to Hawaii Electric Light; Mauo, which owns solar-plus-storage projects totaling 8.6 MW on five University of Hawaii campuses, Mahipapa, which owns a 7.5-MW nameplate biomass facility on Kauai, Alenuihaha Developments, LLC, which owns a collection of renewable energy assets on Oahu and Kauai, and Ka'ie'ie Waho Company, LLC, which owns a 6-MW solar photovoltaic system that provides renewable energy to Kauai Island Utility Cooperative; as well as eliminations of intercompany transactions.
In late February 2024, Hamakua Energy's combustion turbine (CT) and its leased combustion turbine (leased CT) unexpectedly sustained damages resulting in a plant shut down on Hawaii Island. As a result, in April 2024, Hamakua Energy purchased a new CT which was placed into service in June 2024. The leased CT was returned to the lessor and a new leased CT had been delivered and placed into service in September 2024 bringing Hamakua Energy back to full capacity. After conducting an investigation into the root cause of the damages, it was determined that contaminated fuel led to the turbine damages. Pacific Current is currently working with its legal counsel on seeking recovery of its losses related to damages sustained to its plant facilities.
As part of HEI's comprehensive review of strategic options for certain assets of Pacific Current, on February 7, 2025, Pacific Current entered into a Securities Purchase Agreement to sell all the membership interests in Hamakua Holdings, a then
wholly owned subsidiary of Pacific Current and parent company of Hamakua Energy, to an unaffiliated third party. The sale transaction closed on March 10, 2025. As a result of the sale transaction, the Company recorded an after-tax loss on the sale amounting to $9.8 million as of March 31, 2025. The sale of Hamakua Holdings and its subsidiary, Hamakua Energy, does not preclude Pacific Current from seeking recovery of its losses related to the aforementioned damages to its plant facilities from the fuel supplier.
In March 2024, a fire destroyed the cooling tower at the Mahipapa facility on Kauai. The fire was ignited from a vendor's welding activities being performed on the cooling tower during its scheduled maintenance. As a result, the plant was shut down while repairs were being performed. Mahipapa completed repairs to its facility and commenced operations in early December 2024 and returned to full capacity in the first quarter of 2025. In the first quarter of 2025, Mahipapa received insurance proceeds of $1.4 million under its business interruption policy. In addition to working with its insurance company, Mahipapa is currently working with its legal counsel on seeking reimbursement of its losses related to damages sustained to its plant facilities.
As part of HEI's comprehensive review of strategic options for Pacific Current, in June 2025, the Company determined the net assets of the remaining Pacific Current operating subsidiaries (Mauo, LLC, Alenuihaha Developments, LLC, Kaʻieʻie Waho Company, LLC, Upena, LLC and Mahipapa, LLC) met the criteria for classification as held for sale. On August 1, 2025, Pacific Current, through an indirect subsidiary, sold all of the membership interests in Mauo, LLC, Alenuihaha Developments, LLC, Kaʻieʻie Waho Company, LLC and Upena, LLC. See Note 13 of the Condensed Consolidated Financial Statements for more information.
FINANCIAL CONDITION
Liquidity and capital resources.See "Credit and Capital Market Risk" in Item 1A. Risk Factors in HEI's and Hawaiian Electric's 2024 Form 10-K and in Item 1A. Risk Factors below.
HEI's and the Utilities' future results of operations involve significant risks and uncertainties. Factors that could affect HEI's and the Utilities' future operating results and could cause actual results to vary materially from expectations include, but are not limited to, access to capital, ability to attract and retain key personnel, and pending or threatened litigation (including wildfire related litigation noted above).
The Company's objective continues to be to operate a strong, financially healthy enterprise to empower a thriving future for Hawaii. While the fundamentals of its businesses remain strong, the Company took prudent and measured actions to reinforce its commitment to serving the community for the long term. Subsequent to the Maui windstorm and wildfires, in August 2023, HEI and Hawaiian Electric fully drew down $175 million and $200 million, respectively, on their existing revolving credit facilities. As of June 30, 2025, HEI and Hawaiian Electric revolving credit facilities' balance were $51 million and $43 million, respectively. The Company has taken additional prudent measures to strengthen its financial position while continuing to provide reliable service to its customers and reinforcing HEI's commitment to serving the community for the long term such as entering into an asset-based credit facility that allows the Utilities to borrow up to $250 million and filing with the SEC an at-the-market offering program under which HEI may offer and sell up to $250 million of its common stock. Additional proactive measures included suspending the quarterly cash dividend on HEI's common stock after payment of the second quarter dividend in September 2023 and reducing or eliminating discretionary costs.
As of June 30, 2025, the Utilities accrued estimated wildfire liabilities of approximately $1.92 billion (pre-tax), related to the settlement of the Maui windstorm and wildfire tort-related legal claims (see Note 2 of the Condensed Consolidated Financial Statements). HEI and Hawaiian Electric determined that making payments under the terms of the Settlement Agreements in four equal annual installments is the most viable option and have classified the first $479 million installment as a current liability based on expected timing of the payment and the remaining $1.44 billion as a noncurrent liability on the Company's and Utilities' Condensed Consolidated Balance Sheets. To finance the first installment payment, in September 2024, HEI completed the sale of 62.2 million shares of common stock in a registered offering, raising net proceeds of approximately $557.7 million and subsequently transferred the first payment into a new subsidiary, GLST1, which is restricted from disbursing such funds except in connection with the initial payment to the settlement funds.
The following table provides the components of available liquidity as of June 30, 2025. See "Liquidity and capital resources" in Hawaiian Electric's MD&A below for components of its available liquidity under existing credit facilities as of June 30, 2025.
As of June 30, 2025
(in millions) Capacity Outstanding Undrawn
Electric Utility
Total credit, excluding standing commitment letter with HEI1
$ 475 $ 93 $ 382
Total available credit - Electric Utility2
$ 382
All Other
Unsecured revolving line of credit $ 175 $ 51 $ 124
At-the-market program 250 - 250
Total credit and other liquidity - All Other 425 51 374
Restricted credit -
Total available credit - All Other $ 374
Consolidated cash and cash equivalents 154
Total available liquidity from cash and under existing credit and equity program $ 910
1 Pursuant to an HEI and Hawaiian Electric Intercompany Borrowing and Investment Policy which provides Hawaiian Electric a borrowing commitment of $75 million. Hawaiian Electric currently has no borrowings under this policy. See Note 5 of the Condensed Consolidated Financial Statements for a description of the HEI and Hawaiian Electric Intercompany Borrowing and Investment Policy.
2Additionally, as of June 30, 2025 the Electric Utilities had no commercial paper outstanding, and Hawaii Electric Light and Maui Electric had short-term borrowings from Hawaiian Electric of nil and $69.2 million, respectively, which intercompany borrowings are eliminated in consolidation.
As of June 30, 2025, HEI consolidated had $2.1 billion of long-term debt and short-term debt, of which $194 million is due or expected to be repaid within 12 months and $287 million is due within 24 months. On April 9, 2025, pursuant to a March 5, 2025 offer tendered to, and accepted by, each holder of its existing note purchase agreements, HEI repaid a ratable portion of each note using the net cash proceeds from the recent sale of ASB amounting to $384 million. Additionally, HEI repaid $70 million of its unsecured revolving line of credit in the second quarter of 2025.
Management believes with the Company's cash and cash equivalents amount of $154 million and GLST1's restricted cash amount of $479 million, both as of June 30, 2025, the available capacity on Hawaiian Electric's ABL Facility and HEI's and Hawaiian Electric's unsecured lines of credit, additional liquidity under HEI's registered at-the-market offering program as well as expenditure reduction efforts, the Company has adequate cash to meet its financial obligations and sustain operations in the short term, including available sufficient liquidity to fund the first installment of the settlement of wildfire tort claims expected to be made in early 2026 and its other cash obligations for the next 12 months following the issuance of its June 30, 2025 financial statements.
The Company expects that liquidity will continue to be impacted in the long term primarily due to the remaining liability payments to settle wildfire claims; the result of the August 2023 downgrades of their credit ratings to below investment grade which limits the Company from accessing unsecured, short-term borrowings and continues to restrict access to the capital markets and other sources of debt and equity financing in a timely manner and on acceptable terms; and higher working capital requirements resulting from inflation and elevated fuel prices. Although the Company has raised sufficient cash to pay the first installment of the settlement of wildfire tort claims, the Company is currently working with its financial advisors on a financing plan to raise the additional capital necessary to fund the remaining settlement of wildfire tort claims. While management believes the Company will be able to raise the necessary capital, there is no assurance that management's plans will be successful. If the financing plans are unsuccessful, the Company may need to consider other strategic alternatives.
For the Utilities, while fuel prices have moderated from their highs in 2022, they remain elevated and have increased the cost of carrying fuel inventory and higher customer accounts receivable balances as fuel is consumed and billed to customers. Arrears balances have declined to near pre-pandemic levels as the Utilities continue returning to pre-pandemic collection policies, except on Maui, where the moratorium on disconnections remains in place. While the Maui windstorm and wildfires have not and are not anticipated to materially impact accounts receivable, the Maui windstorm and wildfires have and will continue to lead to higher bad debt expense. As of June 30, 2025, approximately $12.1 million of the Utilities' accounts receivables were over 30 days past due, which is a decrease of approximately 34% since December 2024. In addition to the
cash flow impact from delayed collection of accounts receivable, lower kWh sales relative to the level of kWh sales approved in the last rate case generally result in delayed timing of cash flows, resulting in higher working capital requirements (see "Recent Developments" in the Electric utility section below).
If further liquidity is deemed necessary in the short term, Hawaiian Electric could also reduce the pace of capital spending related to non-essential projects, manage O&M expenses, seek borrowings on a secured basis, and explore asset sales.
Credit ratings. On May 28, 2025, June 4, 2025 and June 27, 2025, Moody's, Fitch and S&P, respectively, upgraded HEI's credit ratings as follows:
Fitch
Moody's
S&P
From1
To
From1
To
From1
To
Long-term issuer default, long-term and issuer credit, respectively B
B+
B1
Ba3
B-
B+
Short-term issuer default, commercial paper and commercial paper, respectively
B B
NP
NP
B
B
Outlook Stable
Positive
Stable
Positive
Negative
Watch Positive
1As of December 31, 2024. In March 2025, S&P revised HEI's outlook to "Positive" from "Negative" and affirmed the "B-" issuer credit rating.
Note: The above ratings reflect only the view, at the time the ratings are issued or affirmed, of the applicable rating agency, from whom an explanation of the significance of such ratings may be obtained. Such ratings are not recommendations to buy, sell or hold any securities; such ratings may be subject to revision or withdrawal at any time by the rating agencies; and each rating should be evaluated independently of any other rating.
HEI Consolidated material cash requirements. Material cash requirements of HEI Consolidated include: payments related to settlement of tort-related legal claims and cross claims; Utility-related capital expenditures (including capital expenditures related to wildfires and wildfire mitigations), labor and benefits costs, O&M expenses, legal and consulting costs related to the Maui windstorm and wildfires, fuel and purchase power costs, and debt and interest payments; HEI-related labor and benefits costs, debt and interest payments and legal and consulting costs related to the Maui windstorm and wildfires and HEI equity contributions to support Pacific Current's sustainable infrastructure investments.
The consolidated capital structure of HEI was as follows:
(dollars in millions) June 30, 2025 December 31, 2024
Short-term borrowings, net
$ 49 1 % $ 49 1 %
Long-term debt, net
2,007 56 2,800 64
Preferred stock of subsidiaries 34 1 34 1
Common stock equity 1,534 42 1,479 34
$ 3,624 100 % $ 4,362 100 %
Prior to the Maui windstorm and wildfires, HEI utilized short-term debt, typically commercial paper, to support normal operations, to refinance commercial paper, to retire long-term debt, to pay dividends and for other temporary requirements, including short-term financing needs of its subsidiaries. HEI also periodically makes short-term loans to Hawaiian Electric to meet Hawaiian Electric's cash requirements, including the funding of loans by Hawaiian Electric to Hawaii Electric Light and Maui Electric, but no such short-term loans to Hawaiian Electric were outstanding as of June 30, 2025. Historically, HEI also periodically utilized unsecured long-term debt to fund investments in and loans to its subsidiaries to support their capital improvement or other requirements, to repay long-term and short-term indebtedness and for other corporate purposes. The downgrades of HEI's and Hawaiian Electric's credit ratings have negatively impacted each of HEI's and Hawaiian Electric's ability to access capital markets and other sources of debt and equity financing in a timely manner and on acceptable terms. As of June 30, 2025, HEI and Hawaiian Electric had no commercial paper outstanding.
See Note 5 of the Condensed Consolidated Financial Statements for a brief description of the Company's loans.
On September 25, 2024, HEI completed the sale of 62.2 million shares of common stock. The shares were issued under a registration statement registering up to $575 million of common stock. The net proceeds from the sale of common stock amounted to approximately $557.7 million and will be used to fund the Company's contribution to the expected Maui wildfire tort litigation settlement and for general corporate purposes.
On September 19, 2024, HEI filed a shelf registration statement with the SEC for an at-the-market offering program under which HEI may offer and sell, from time to time at its sole discretion, its common stock, without par value, having an aggregate offering price of up to $250 million. To date, HEI has not sold any common stock under this program.
There were no new issuances of common stock through the HEI Dividend Reinvestment and Stock Purchase Plan or the Hawaiian Electric Industries Retirement Savings Plan in the six months ended June 30, 2025 and 2024.
For the first six months of 2025, net cash provided by operating activities of HEI consolidated was $184 million. Net cash used in investing activities for the same period was $152 million, primarily due to capital expenditures. Net cash used in financing activities for the same period was $638 million, primarily due to repayment of long-term debt.
Dividends. The payout ratios for the first six months of 2025 and full year 2024 were nil. Each quarter, the HEI Board of Directors evaluates whether to declare a dividend and considers many factors in the evaluation including, but not limited to, the Company's results of operations, liquidity, the long-term prospects for the Company, current and expected future economic conditions, and capital investment alternatives. In August 2023, in consideration of the potential impact from the Maui windstorm and wildfires, the HEI Board of Directors voted to suspend the quarterly cash dividend, starting after the second quarter 2023 dividend, and has not declared a cash dividend since that time. This action was intended to allow the Company to provide additional liquidity and allocate cash to rebuilding and restoring power and help ensure a strong future for the Utilities. In May 2025, after a temporary suspension of Hawaiian Electric's quarterly cash dividend to HEI that began with the second quarter 2024 dividend, the Hawaiian Electric Board of Directors approved a $10 million quarterly dividend for each of the first and second quarters of 2025. This decision was made after considering several factors, including the continued progress of the Maui windstorm and wildfire settlement, the Utilities' results of operations and the Utilities' liquidity position.
MATERIAL ESTIMATES AND CRITICAL ACCOUNTING POLICIES
In preparing financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses. Actual results could differ significantly from those estimates.
In accordance with SEC Release No. 33-8040, "Cautionary Advice Regarding Disclosure About Critical Accounting Policies," management has identified the accounting policies it believes to be the most critical to the Company's financial statements-that is, management believes that these policies are both the most important to the portrayal of the Company's results of operations and financial condition, and currently require management's most difficult, subjective or complex judgments.
For information about these material estimates and critical accounting policies, in addition to the critical policy discussed below, see pages 42 to 44 and 63 of the MD&A included in Part II, Item 7 of HEI's and Hawaiian Electric's 2024 Form 10-K.
Following are discussions of the results of operations, liquidity and capital resources of the electric utility segment.
Electric utility
Recent developments. See also "Recent developments" in HEI's MD&A and Note 2 of the Condensed Consolidated Financial Statements, which includes disclosures relating to Maui windstorm and wildfires.
For the second quarter of 2025, the Utilities generated net income of approximately $39.2 million compared to a net loss of $1.2 billion for the same quarter of 2024. See "Results of operations" below for variance explanations.
In the secondquarter of 2025, kWh sales volume increased 3.1% compared to the same period in 2024. The increase reflects warmer, more humid weather as well as the continuing economic recovery since the Maui windstorm and wildfires and increased pumping loads as Maui energy consumption increased 7.7% in the secondquarter of 2025 compared to the same period in 2024.
The price of crude oil has decreased 19.7% over the same quarter in the prior year. The Utilities are able to pass through fuel costs to customers and have limited fuel cost exposure through a 2% fuel cost-risk sharing mechanism (approximately $3.7 million maximum penalty/reward exposure annually).
In June 2025, the Consumer Price Index (CPI) increased 2.7% over the last 12 months. In Hawaii, the May 2025 Urban Hawaii (Honolulu) CPI increased 2.7% over the last 12 months. Under the PBR framework, inflation risk for the Utilities is partially mitigated by an Annual Revenue Adjustment (ARA), which is based on a formula that includes a compounded and non-compounded portion.
•The compounded portion of the ARA includes an adjustment for the annual change in inflation based on the estimated change in Gross Domestic Product Price Index (GDPPI) for the upcoming year, less a predetermined annual productivity factor (currently set at zero), less a 0.22% customer dividend, applied to a basis equal to test year target revenues plus the RAM Revenue adjustments in effect prior to the implementation of PBR, plus the prior adjustment year's compounded portion of the ARA. The inflation factor percentage is the consensus projection of annual percentage change in GDPPI for the following calendar year published by Blue Chip Economic Indicators each
October. For the 2024 calendar year, the forecasted 2024 GDPPI was 2.18% (net of the 0.22% customer dividend), measured in October 2023, and became effective in rates on January 1, 2024. For the 2025 calendar year, the forecasted 2025 GDPPI was 1.98% (net of the 0.22% customer dividend), measured in October 2024, and became effective in rates on January 1, 2025.
•The non-compounded portion of the ARA includes a subtractive component, representing the management audit savings commitment, or refund to customers, which was approved by the PUC for the years 2021 through 2025.
Customer accounts receivable decreased in 2025 by $13 million, or 7%, with the number of accounts past due greater than 30 days decreasing by 4% since December 31, 2024. The decrease in accounts receivables was primarily driven by receipt of government arrears balance and higher cash receipts associated with increased disconnection efforts. Further, arrears balances have declined to near pre-pandemic levels as the Utilities continue returning to pre-pandemic collection policies, except on Maui, where the moratorium on disconnections remain in place. See "Financial Condition-Liquidity and capital resources" below for additional information.
Regulatory and legislative developments.
Legislation. On June 6, 2025, Governor Josh Green signed Senate Bill 1501, now known as Act 191, which allows the State to "step-in" for the Utilities in the case of utility financial distress, ensuring project owners receive payment, addressing concerns of some independent power producers' ability to procure low-cost financing for new renewable energy and storage projects due to the Utilities' credit rating. On July 1, 2025, the Governor signed into law Senate Bill 897, now known as Act 258, which directs the PUC to study the viability of a wildfire relief fund, establish an aggregate liability cap on economic damages from future wildfires and authorizes securitization to finance wildfire safety and resilience infrastructure improvements. On July 8, 2025, the Governor signed House Bill 1001, now known as Act 301, which appropriates funds to address the State of Hawaii's settlement of claims related to the Maui wildfire and windstorm tort litigation settlement. The three new laws could help support the Utilities' financial stability to move forward and Act 191 supports the Utilities' ability to procure energy in order to provide customers and communities with safe, reliable and affordable clean energy.
On July 2, 2025, the Governor signed Senate Bill 589, now known as Act 266, which, among other things, authorizes wheeling of renewable energy and requires the PUC to establish policies and procedures to implement wheeling and microgrid service tariffs. Act 266 also requires the PUC to establish an installation goal for new customer-sited distributed energy resources and establish tariffs to achieve the installation goal and for grid service programs, microgrids, and community-based renewable energy. The Utilities are currently assessing the potential impact related to wheeling as the PUC works to establish the provisions and terms for the implementation of wheeling in compliance with Act 266.
Trade policies. Impacts to the Utilities from trade policies imposed by the U.S. or its trading partners are uncertain at this time. The Utilities estimated that in 2024, more than 90% of the Utilities. capital goods were domestically sourced. However, the Utilities and their independent power producers procure capital goods that flow through global supply chains and may include raw materials, sub-components, or components sourced or assembled outside the U.S. Utility capital costs and the cost of power procured from independent power producers may increase due to new trade policies and changes in trade policy from the U.S. and its trading partners, based on the amount of foreign content of capital goods. It is also possible that trade policies could impact commodities and raw materials costs, leading to inflation of utility capital costs indirectly through the broader supply chain. Utility-scale battery projects planned by both Hawaiian Electric and independent power producers may see significant cost increases or supply chain challenges, as the majority of battery components are currently manufactured in, or have significant supply chain exposure to, the People's Republic of China. The Utilities are still assessing the potential impact of the trade policies.
Federal grant. On November 15, 2021, former President Biden signed into law the $1.2 trillion Infrastructure Investment and Jobs Act (IIJA), which includes approximately $550 billion of new federal spending to be allocated over the next five years through various programs. The funding is expected to help the State of Hawaii achieve its sustainability goals, including renewable energy, resilience, and decarbonization, while also prioritizing economic development, equity and affordability. The Utilities have been pursuing potential grant funding of projects under various programs as primary applicant as well as in partnership with other organizations. On August 7, 2024, the Utilities received a notification from the U.S. Department of Energy that their Climate Adaption Transmission and Distribution Resilience Program (Resilience Program) application for $95 million in federal funds under IIJA was officially awarded. See "Utility projects" in Note 4 of the Condensed Consolidated Financial Statements for additional discussions.
In 2025, President Trump issued multiple Executive Orders that impact both IIJA and Inflation Reduction Act funding. These Executive Orders could potentially lead to project delays and economic uncertainty. The Utilities are still evaluating the potential impact and continue to monitor for impacts of any new Executive Orders and changes that are passed down through the federal contracting officer for the Resilience Program. As of June 30, 2025, the Utilities' reimbursement requests have been granted.
System reliability. Since the August 2023 Maui windstorm and wildfires, the Utilities have developed a set of Interim Wildfire Safety Measures to mitigate the risk of wildfires in areas identified as having higher risk of wildfire in all service territories (Oahu, Maui County, and Hawaii Island). These interim measures represent actions the Utilities have performed in 2024. On January 10, 2025, the Utilities began work on and filed their 2025-2027 Wildfire Safety Strategy, which outlines their plans to reduce wildfire risk throughout their service territories over the next three years. In the near term, it is anticipated that these measures will result in disruptions to service and negatively impact Transmission and Distribution System Average Interruption Duration Index and System Average Interruption Frequency Index. While the Utilities work to refine these measures over time to mitigate customer impacts, the Utilities are currently focused on taking immediate steps to keep island communities safe during extreme weather events. For a discussion regarding the launch of the Public Safety Power Shutoff program, see discussion below under "Wildfire Safety Measures."
Hawaii Island has two generators out of service for extended maintenance. While these units are unavailable for maintenance, during certain periods there may be reductions in generation reserve margins and failure of other generators, which could risk generation shortfalls.
For a discussion regarding the impact of the Maui windstorm and wildfires on the Utilities' liquidity and capital resources, see discussion below under "Financial Condition-Liquidity and capital resources."
RESULTS OF OPERATIONS
Three months ended June 30 Increase
2025 2024 (decrease) (dollars in millions, except per barrel amounts)
$ 742 $ 792 $ (50)
Revenues.Net decrease largely due to:
$ (48)
lower fuel oil prices and lower kWh generated1
(7)
lower purchased power energy prices, partially offset by higher kWh purchased and higher PPAC revenues2
(1)
lower Major Project Interim Recovery (MPIR) revenue
1
higher demand side management revenue
6
higher revenue from ARA
211 259 (48)
Fuel oil expense1.Net decrease largely due to lower fuel oil prices, better heat rate performance due to the impact of battery storage round trip efficiency loss in second quarter of 2024, and lower kWh generated
175 181 (6)
Purchased power expense1, 2.Net decrease largely due to lower purchased power energy prices, offset in part by higher kWh purchased, along with the addition of Stage 1 and Stage 2 renewable projects
158 148 10
Operation and maintenance expenses. Net increase largely due to:
7
higher wildfire mitigation program related to vegetation management and inspections
4
higher Maui windstorm legal and consulting costs
2
higher property and general liability insurance costs
2
more generation maintenance work performed
1
higher IT consulting and system maintenance expenses
1
higher Demand Response cost
(3)
the settlement of indemnification claims asserted by the State of Hawaii in 20243
(5)
lower transmission and distribution maintenance expense
- 1,712 (1,712)
Wildfire tort-related claims.Decrease due to the accrual of estimated wildfire liability related to the settlement of the Maui windstorm and wildfire tort-related legal claims and cross claims in 2024
134 137 (3)
Other expenses.Decrease due to lower revenue taxes, partially offset by higher depreciation expense due to increasing investments to integrate more renewable energy and improve customer reliability and system efficiency
65 (1,644) 1,709
Operating income (loss). Increase largely due to wildfire tort-related claims in 2024, higher ARA revenues, better heat rate performance, offset in part by higher operation and maintenance expenses
50 (1,659) 1,709
Income (loss) before income taxes.Increase largely due to higher operating income and higher allowance for funds used during construction related to increased capital expenditures, offset in part by lower interest income earned and higher interest expense
39 (1,229) 1,268
Net income (loss) for common stock. Increase due to higher income before income taxes. See below for effective tax rate explanation
2,032 1,971 61
Kilowatthour sales (millions)4
$ 100.40 $ 120.12 $ (19.72) Average fuel oil cost per barrel
Six months ended June 30 Increase
2025 2024 (decrease) (dollars in millions, except per barrel amounts)
$ 1,481 $ 1,581 $ (100)
Revenues.Net decrease largely due to:
$ (93)
lower fuel oil prices partially offset by higher kWh generated1
(21)
lower purchased power energy prices, partially offset by higher kWh purchased and higher PPAC revenues2
1
higher pilot process recovery
2
higher demand side management revenue
11
higher revenue from ARA
449 543 (94)
Fuel oil expense1.Net decrease largely due to lower fuel oil prices and better heat rate performance due to the impact of battery storage round trip efficiency loss and the loss of more efficient generator units on Oahu and Hawaii Island in the first half of 2024, offset in part by higher kWh generated
322 341 (19)
Purchased power expense1, 2.Net decrease largely due to lower purchased power energy prices, along with the settlement of liquidated damages with Hamakua Energy, offset in part by higher kWh purchased and continued addition of Stage 1 and Stage 2 renewable projects
301 291 10
Operation and maintenance expenses.Net increase largely due to:
11
higher wildfire mitigation program related to vegetation management and inspections
5
higher property and general liability insurance costs
5
higher Maui windstorm and wildfires legal and consulting costs
2
higher Demand Response cost
(2)
lower bad debt expense
(10)
the settlement of indemnification claims asserted by the State of Hawaii in 20243
- 1,712 (1,712)
Wildfire tort-related claims.Decrease due to the accrual of estimated wildfire liability related to the settlement of the Maui windstorm and wildfire tort-related legal claims and cross claims in 2024
268 274 (6)
Other expenses. Decrease due to lower revenue taxes, partially offset by higher depreciation expense due to increasing investments to integrate more renewable energy and improve customer reliability and system efficiency
140 (1,581) 1,721
Operating income (loss). Increase largely due to wildfire tort-related claims in 2024, higher ARA revenues, better heat rate performance, offset in part by higher operation and maintenance expenses
112 (1,608) 1,720
Income (loss) before income taxes. Increase largely due to higher operating income, higher allowance for funds used during construction related to increased capital expenditures, and higher interest income earned, offset in part by higher interest expense
87 (1,190) 1,277
Net income (loss) for common stock.Increase due to higher income before income taxes. See below for effective tax explanation
3,997 3,877 120
Kilowatt-hour sales (millions)
$ 102.56 $ 121.01 $ (18.45) Average fuel oil cost per barrel
473,293 470,532 2,761 Customer accounts (end of period)
1The rate schedules of the electric utilities currently contain energy cost recovery clauses (ECRCs) through which changes in fuel oil prices and certain components of purchased energy costs are passed on to customers.
2The rate schedules of the electric utilities currently contain Purchased Power Adjustment Clauses (PPACs) through which changes in purchased power expenses (except purchased energy costs) are passed on to customers.
3Pursuant to an agreement to settle indemnification claims with the State of Hawaii. See Note 2 of the Condensed Consolidated Financial Statements.
4 kWh sales were higher compared to the same quarter in prior year. The increase in sales can be attributed to warmer, more humid weather on Oahu and the recovery from the Maui windstorm and wildfires.
The Utilities' effective tax rates for the first six months of 2025 and 2024 were 21% tax expense and 26% tax benefit, respectively. The Utilities' effective tax rates for the second quarter of 2025 and 2024 were 21% tax expense and 26% tax
benefit, respectively. The effective tax rates for the second quarter and first six months of 2025 were lower than the comparable periods in 2024 primarily due to the substantial pre-tax loss in the second quarter of 2024 resulting from the accrual of the loss contingencies related to the wildfire tort-related claims and because the impact of permanent items had a smaller impact on the effective rates in prior year comparable periods.
Hawaiian Electric's consolidated return on average common equity (ROACE) was 3.7% and not meaningful for the twelve months ended June 30, 2025 and June 30, 2024, respectively.
For more information of the Utilities' incremental expenses related to the Maui windstorm and wildfiresfor the three and six months ended June 30, 2025 and 2024, see "Results of operations-Maui windstorm and wildfiresrelated expenses" in HEI's MD&A.
The net book value (cost less accumulated depreciation) of utility property, plant and equipment (PPE) as of June 30, 2025 amounted to $5.7 billion, of which approximately 19% related to generation PPE, 65% related to transmission and distribution PPE, and 16% related to other PPE. Approximately 5% of the total net book value relates to generation PPE that has been deactivated or that the Utilities plan to deactivate or decommission by 2046.
See "Economic conditions" in the "HEI Consolidated" section above.
Executive overview and strategy. The Utilities provide electricity on all the principal islands in the state, other than Kauai, to approximately 95% of the State's population, and operate five separate grids. The Utilities' mission is to empower their communities and customers with safe, reliable, resilient, affordable, and clean energy. The goal is to create a safe, modern, resilient, flexible, and dynamic electric grid that protects Hawaii from impacts of climate change, position the Utilities to achieve the expectations of their customers and communities and earn their trust, and achieve Hawaii's decarbonization goals that are aligned with the statutory goal of 100% renewable portfolio standard and net-negative carbon emissions by 2045.
Performance-based regulations. On December 23, 2020, the PUC issued a decision and order (PBR D&O) approving a new performance-based regulation framework (PBR Framework). See "Regulatory proceedings" in Note 4 of the Condensed Consolidated Financial Statements.
Wildfire Safety Measures. The Utilities first began developing a Wildfire Safety Strategy in 2019 and continue to adapt the plan to address the elevated risks in Hawaii. Since the Maui windstorm and wildfires, the Utilities developed a set of Interim Wildfire Safety Measures designed to reduce the risk of wildfires associated with utility infrastructure in service territory areas identified as posing a higher wildfire risk. These interim measures represent actions the Utilities had either already started, or were to start in 2024, while simultaneously working to develop a more comprehensive strategy. These actions included wildfire risk analysis, operation procedures and grid design changes, enhanced inspection and vegetation management plans, and system hardening. In January 2025, the Utilities developed and filed with the Hawaii PUC a 2025-2027 Wildfire Safety Strategy, which identifies risk mitigation strategies to perform over the next three years across their service territories. The strategies and actions include additional operational changes, grid hardening work, enhanced inspections and vegetation management, and risk modeling to inform and prioritize hardening work and operational actions. On May 30, 2025, the Utilities submitted an application to the PUC for Exceptional Project Recovery Mechanism (EPRM) cost recovery estimated at $350 million, net of costs funded through other existing programs.
One of the interim measures is the Public Safety Power Shutoff (PSPS) program, which calls for the Utilities to preventatively de-energize circuits in areas identified as high fire risk during certain weather conditions. The PSPS program launched on July 1, 2024 and is ready to use, if and when it is needed, to protect customers, communities and employees. The initial PSPS protocols and operational procedures represent an early-stage iteration, which will evolve over time as more analytical, forecast, and situational awareness capabilities and wildfire mitigations are deployed. De-energizing circuits in high wildfire risk areas will lead to extended interruptions for many customers, even if not in a high wildfire risk area. The Utilities will continue to work with key stakeholders in balancing the risk of utility-related wildfires with the risk to the public arising from not having electricity.
Transition to a decarbonized and sustainable energy future. The Utilities are fully committed to leading and enabling pathways to a decarbonized and sustainable energy future for Hawaii. A sustainable energy future is one that focuses on delivering electricity safely, reliably and affordably, strengthening resilience and shifting away from fossil-fueled resources. The Utilities believe that a holistic approach to climate change is needed, working on both climate mitigation efforts along with climate adaptation efforts. Climate mitigation requires achieving the Utilities' decarbonization and renewable energy commitments, facilitating and promoting beneficial electrification, and deploying carbon removal and offsets among other levers to reduce statewide emissions.
In the fourth quarter of 2021, the Utilities outlined their Climate Action Plan to cut carbon emissions from power generation 70% by 2030, compared to a 2005 baseline. The emissions covered by this goal include stack emissions from generation owned by Hawaiian Electric and IPPs who sell electricity to the Utilities. Since that time, delays and cancellations in
the commercial operation of new renewable third-party generation resources and higher costs as a result of supply chain disruptions and inflationary pressures, as well as federal policies have slowed the pace of progress toward reducing greenhouse gas emissions. Also, see the "Developments in renewable energy efforts-New renewable PPAs" section below. The 2025 budget reconciliation bill signed into law by President Trump on July 4, 2025, limits the ability of recently selected and new wind and solar projects to qualify for federal tax credits. Any loss in renewable energy tax credits will likely result in higher prices for new renewable projects, which rely on such incentives to provide clean, affordable energy. Further, new tariffs imposed on equipment and materials used in the construction of renewable facilities will have an impact on pricing of new renewable projects. As a result of these challenges and the downgrade of Hawaiian Electric's credit ratings after the Maui windstorm and wildfires, the Utilities expect the planned 70% reduction in carbon emissions to be achieved later than the original 2030 target date. However, the Utilities will continue to replace significant amounts of fossil fuel generation with renewable energy between now and 2030 and expect to meet or exceed the State of Hawaii's RPS goals.
Hawaiian Electric has also committed to achieving net zero carbon emissions from power generation by 2045 or sooner. While the timing of the Utilities' carbon reduction goals will be impacted by federal policies, key elements of the 2030 plan have already been completed or remain on track to be completed by 2030, including the closure of AES Hawaii, Inc., the State's last coal-fired IPP plant, that occurred in September 2022, increasing rooftop solar by more than 50% over 2021 levels, retiring six fossil fuel generating units, increasing grid-scale and customer-owned storage, expanding geothermal resources, and creating customer incentives for using clean, lower-cost energy at certain times of the day and using less fossil-fueled energy at night. The retirement of fossil-fueled generating units is consistent with state policy and supported by Hawaii State law.
In January 2025, the State of Hawaii issued two key policy documents and an alternative fuel study. The Hawaii PUC issued its 2024 Inclinations on the Future of Energy in Hawaii (2024 PUC Inclinations). The 2024 PUC Inclinations are intended to provide a guide for the completion of energy infrastructure upgrades for public safety, reliability and resiliency. This includes among other items, strategic hardening, diversification and enhancements of transmission and distribution systems, expedited replacement of older fossil fired generation, streamlined interconnection for renewable utility scale and distributed energy resources, including a specific goal to limit fossil fuel generation to no more than 40% on each island by 2030, software and hardware improvement to prevent cybersecurity threats, creation of resilience hubs, and integration of electric, gas, and renewable resources to support continuity of energy, telecommunications, water and wastewater services. The 2024 PUC Inclinations specifically state that "Strategic ownership of new generation (by the Utilities) may be beneficial, especially when such ownership stabilizes utility finances, benefits from low-interest federal loans or advances other objectives such as operational accountability, resilience and public safety."
Governor Josh Green issued Executive Order No. 25-01, Accelerating Hawaii's Transition Toward 100 Percent Renewable Energy (EO 25-01). EO 25-01 sets forth collective actions to accelerate the State's decarbonization, stabilize and reduce energy costs, lower the State's carbon footprint, strengthen energy security, and gain access to capital for the energy transition. Among other actions, EO 25-01 calls for 100% renewable electricity production in the counties of Hawaii and Maui by 2035 and achieving a 70% reduction of Oahu's greenhouse gas emissions reductions from the electricity sector by 2035, using 2005 as a baseline, calls for the maximization of distributed solar energy paired with energy storage, including the installation of 50,000 new distributed energy resources by 2030, accelerating permitting tied to renewable energy, approving interconnection, and addressing energy burdens on low- and moderate-income residents.
The Hawaii State Energy Office's Alternative Fuel, Repowering and Energy Transition Study expresses concern about the speed of the transition to renewable energy and cites to the continued reliance on imported oil as a driver of high bills and intense carbon emissions. The report makes a case for the use of liquefied natural gas on Oahu to replace low sulfur fuel oil during the transition to 100% renewable energy, and names several entities as potential investors that could help speed the transition. The Utilities are currently evaluating how their existing plans fit within these policies. Importantly, all three documents recognize that to achieve the State's ambitious goals is a collective effort that will require government agencies, electric utilities, and private stakeholders to work together, acknowledging that each of these groups has an important role to play. The 2024 PUC Inclinations for example state: "Energy utilities, government agencies and private stakeholders must embrace an ethos of collective responsibility to confront and effectively mitigate the vulnerabilities revealed by Lahaina's heartbreaking tragedy, the COVID pandemic, ongoing global unrest, cybersecurity threats and the overarching climate crisis." The PUC later states: "The Commission does not expect energy utilities to accelerate their transformation without regulatory assistance and third-party resources." All three documents also recognize the progress made to date towards the State's renewable energy goals. The Utilities remain committed to working with all stakeholders to reach Hawaii's ambitious renewable energy goals.
Hawaii's renewable portfolio standard law requires electric utilities to meet an RPS of 30%, 40%, 70% and 100% by December 31, 2020, 2030, 2040 and 2045, respectively. Hawaii law has also established a target of sequestering more atmospheric carbon and greenhouse gases than emitted within the state by 2045. The Utilities' strategies and plans are fully aligned in meeting these targets (see also "Integrated Grid Planning" below).
The Utilities have made significant progress on the path to clean energy and have been successful in achieving RPS goals. To date the Utilities have met all of the statutory RPS goals, including exceeding the latest milestone RPS target of 30% for 2020, where it achieved an RPS of 34.5%. In July 2022, former Governor Ige signed Act 240 (H.B.2089), that amended the RPS calculation from renewable energy as a percentage of sales to renewable energy as a percentage of total generation. The amended RPS calculation results in a lower calculated percentage than the amount calculated under the previous methodology. For example, the 2022 RPS achieved under the revised RPS calculation was 31.8% versus 39.1% under the prior method. The change in the definition is effective from July 2022 forward and will require that the Utilities acquire more renewable energy than under the previous RPS calculation to comply with the RPS milestones; however, the Utilities expect to continue to meet the RPS milestones under the amended RPS law. (See "Developments in renewable energy efforts" below).
If the Utilities are not successful in meeting the RPS targets as mandated by law, the PUC could assess a penalty of $20 for every megawatt-hour (MWh) that an electric utility is deficient. Based on the level of total generation in 2024, a 1% shortfall in meeting the 2030 RPS requirement of 40% would translate into a penalty of approximately $2.1 million. The PUC has the discretion to reduce the penalty due to events or circumstances that are outside an electric utility's reasonable control, to the extent the event or circumstance could not be reasonably foreseen and ameliorated. In addition to penalties under the RPS law, failure to meet the mandated RPS targets would be expected to result in a higher proportion of fossil fuel-based generation than if the RPS target had been achieved, which in turn would be expected to subject the Utilities to limited commodity fossil fuel price exposure under a fuel cost risk-sharing mechanism. The fuel cost risk-sharing mechanism apportions 2% of the fuel cost risk to the utilities (and 98% to ratepayers) and has a maximum exposure (or benefit) of $3.7 million. Conversely, the Utilities have incentives under PIMs that provide a financial reward for accelerating the achievement of renewable generation as a percentage of total generation, including customer supplied generation. In 2024, the Utilities achieved a 35.8% RPS accruing a reward of $1.9 million based on $10/MWh in exceedance of 34.0% RPS. In 2025, the Utilities are eligible for a reward of $10/MWh in exceedance of 35.0% RPS.
The Utilities are fully aligned with, and supportive of, state policy to achieve a decarbonized future and have made significant progress in reducing emissions through renewable energy and electrification. This alignment with state policy is reflected in management compensation programs and the Utilities' long-range plans, which include aspirational targets in order to catalyze action and accelerate the transition away from fossil fuels throughout their operations at a pace more rapid than dictated by current law. The long-range plans, including aspirational targets, serve as guiding principles in the Utilities' continued transformation, and are updated regularly to adapt to changing technology, costs, and other factors. While there is no financial penalty for failure to achieve the Utilities' long-range aspirational objectives, the Utilities recognize that there are environmental and social costs from the continued use of fossil fuels.
The State of Hawaii's policy is supported by the regulatory framework and includes a number of mechanisms designed to maintain the Utilities' financial stability during the transition toward the State's decarbonized future. Under the sales decoupling mechanism, the Utilities are allowed to recover from customers, target test year revenues, independent of the level of kWh sales, which have generally trended lower over time as privately-owned distributed energy resources have been added to the grid and energy efficiency measures have been put into place. Other regulatory mechanisms under the PBR framework reduce some of the regulatory lag during the multi-year rate plan, such as the annual revenue adjustment to provide annual changes in utility revenues, including inflationary adjustments, and the EPRM, which allows the Utilities to recover and earn on certain approved eligible projects placed into service. See "Regulatory proceedings" in Note 4 of the Condensed Consolidated Financial Statements.
Integrated Grid Planning. Achieving high levels of renewable energy and a carbon free electric system will require modernizing the grid through coordinated energy system planning in partnership with local communities and stakeholders. To accomplish this, the Utilities are implementing an innovative systems approach to energy planning intended to yield the most cost-effective renewable energy and decarbonization pathways that incorporates customer and stakeholder input.
The Integrated Grid Planning (IGP) process utilizes an inclusive and transparent stakeholder engagement model to provide an avenue for interested parties to engage with the Utilities and contribute meaningful input throughout the IGP process. The IGP Stakeholder Council, Technical Advisory Panel and working groups have been established and meet regularly to provide feedback and input on specific issues and process steps in the IGP. On March 7, 2024, the PUC accepted the Utilities' final Integrated Grid Plan. The Integrated Grid Plan proposes actionable steps to decarbonize the electric grid on the State of Hawaii's timeline, with a flexible framework that can adapt to future technologies. The Integrated Grid Plan is the culmination of more than five years of partnership with stakeholders and community members across the islands. Together, they forecasted future energy needs and identified strategies to meet Hawaii's growing energy demand with 100% renewable resources.
Demand response programs. Pursuant to PUC orders, the Utilities are developing an integrated Demand Response Portfolio Plan that will enhance system operations and reduce costs to customers. The reduction in cost for the customer will take the form of either rates or incentive-based programs that will compensate customers for their participation individually, or
by way of engagements with turnkey service providers that contract with the Utilities to aggregate and deliver various grid services on behalf of participating customers and their distributed assets.
On June 8, 2021, the PUC approved the Emergency Demand Response Program (EDRP), a battery storage incentive program to dispatch electricity between 6 p.m. to 8 p.m. daily from participating residential and commercial customers, to address the potential reserve shortfalls following the AES coal plant retirement. As of June 30, 2025, the Utilities have received and approved applications totaling 47.95 MW on Oahu.
On March 30, 2022, the Utilities filed with the PUC to request expanding the EDRP for up to 15 MW on the island of Maui and received PUC approval on May 20, 2022. The EDRP on Maui became effective as of June 1, 2022. Subsequently on June 23, 2022, the PUC approved the cost recovery of the additional incentives for both Oahu and Maui through the Demand Side Management Surcharge. As of June 30, 2025, the Utilities have received and approved applications totaling 10.55 MW on Maui.
Grid modernization. The overall goal of the Grid Modernization Strategy (GMS) is to deploy modern grid investments at an appropriate priority, sequence and pace to cost-effectively maximize flexibility, minimize the risk of redundancy and obsolescence, deliver customer benefits and enable greater resiliency, reliability, distributed energy resources and renewable energy integration.
Deployment was planned in two phases. The Utilities completed Phase 1 deployment of 447,000 advanced meters, servicing approximately 95% of the customers in 2024 and are recovering associated costs under the MPIR mechanism. Since GMS Phase 1 Project completion, the Utilities continue to deploy advanced meters as part of normal meter shop operations under the recovery of Annual Revenue Adjustment mechanism.
The Utilities filed their initial application with the PUC on September 30, 2019 for an Advanced Distribution Management System as part of Phase 2 of their GMS implementation. However, as the Utilities were unsuccessful in securing IIJA federal funding in 2024, the Utilities are currently re-scoping GMS Phase 2 and plan to file another updated and supplemented PUC application for updated project costs in the third quarter of 2025.
Community-based renewable energy.In December 2017, the PUC adopted a community-based renewable energy (CBRE) program framework which allows customers who cannot, or chose not to, take advantage of private rooftop solar to receive the benefits of renewable energy to help offset their monthly electric bills and support clean energy for Hawaii. The program has two phases.
The first phase includes five projects currently in operation (3,270 kW on Oahu, 28.32 kW on Maui, 750 kW on Hawaii and 250 kW on Molokai).
In 2021 and 2022, the Utilities opened their Tranche 1 RFPs and low-to-moderate income RFPs for Oahu, Maui and Hawaii Island, as well as RFPs for Molokai and Lanai. This second phase includes 12.5 MW of dedicated-Low-to-Moderate Income projects, which are expected to become operational in 2026.
For Lanai, the Utilities combined the previously issued Variable Renewable Dispatchable Generation Paired with Energy Storage RFP and the CBRE RFP to optimize the benefits of procuring renewable energy, spur development and increase the likelihood of success of the CBRE Program on Lanai. A project was selected in the Lanai RFP, but negotiations were terminated. On July 1, 2022, a replacement project was selected and negotiations commenced. On October 23, 2024, the developer submitted a withdrawal letter to the Utilities. See "Developments in renewable energy efforts-Requests for renewable proposals, expressions of interest, and information" for more information. The Utilities are exploring other options for procuring renewable energy on Lanai.
On Molokai, two contracts for solar plus storage facilities with a total capacity of 2.45-MW of photovoltaic (PV) paired with 11.1-MWh of battery energy storage were executed and approved by the PUC on January 8, 2024.
The Utilities CBRE Phase 2 Rule 29 became effective on March 10, 2022. The Utilities are currently accepting project applications for small CBRE projects less than 250 kW in size. The PUC reserved 45 MW as well as a small amount of unallocated capacity from Phase 1 for small projects in Phase 2 on Oahu, Maui and Hawaii Island. The Utilities have developed a CBRE Portal where Subscriber Organizations can apply for small project capacity and manage subscribers for all CBRE projects in the program. Customers can also use the CBRE Portal to solicit subscription quotes, compare, and subscribe to a project once the Subscriber Organization has added their project to the portal.
Microgrid services tariff proceeding. In enacting Act 200 of 2018, the Hawaii legislature found that Hawaii's residents and businesses were vulnerable to disruptions in the islands' energy systems caused by extreme weather events or other disasters and stated its belief that the use of microgrids would build energy resiliency into Hawaii's communities, thereby increasing public safety and security. The purpose of Act 200 was therefore to encourage and facilitate the development and use of microgrids through the establishment of a standard microgrid services tariff. In July 2018, pursuant to Act 200, the PUC
opened a proceeding to investigate the establishment of a microgrid services tariff. For Phase 1, the PUC approved the Microgrid Service Tariff developed by the Utilities, which created a regulatory pathway to microgrid development in Hawaii.
For Phase 2, the PUC established its Prioritized Issues for Resolution of the Microgrid proceeding, which includes the following: 1) Microgrid Compensation and Grid Services; 2) Utility Compensation; 3) Customer Protection and Related Considerations; 4) Interconnection; and 5) working group coordination with related microgrid and resilience Initiatives at Hawaiian Electric and government agencies.
Additionally, the PUC provided further guidance to the working group to prioritize discussion of the microgrid types in the following order: 1) Hybrid Microgrid - Third Party Developer using Utility lines/infrastructure; 2) Hybrid Microgrid - Utility Project with Partners; and 3) Customer Microgrid. Additionally, the PUC instructed the working group to discuss microgrid compensation and continue the involvement of microgrid developers in working group meetings.
On June 12, 2025, the PUC issued an order closing the docket as the PUC believes that the primary objectives of Act 200 have been accomplished. However, the PUC also believes that further modifications to the Microgrid Services Tariff should be explored, such exploration should be within the context of the State's current resilience needs. To further these objectives, the PUC intends to establish an informal working group. On July 2, 2025, Governor Josh Green signed Senate Bill 589, now known as Act 266, which, among other things, authorizes wheeling of renewable energy (100 kW - 2 MW) and requires the PUC to establish policies related to distributed energy resources, retail wheeling, and microgrid service tariffs.
Investigation on the Establishment of Wheeling.On July 1, 2024, the PUC issued an order to institute a proceeding to investigate the establishment of electricity wheeling policies and procedures for the electric utilities for the State of Hawaii. The PUC stated that it intended to address matters using lessons learned in the initial three docket phases to explore implementation of an intragovernmental wheeling policy and an evaluation of retail wheeling in subsequent phases, as appropriate.
On May 15, 2025, the PUC issued an order, suspending the procedural schedule for the docket in consideration of Senate Bill 589, and set a status conference for June 24, 2025. By suspending the procedural schedule and convening a status conference, the PUC sought to facilitate a comprehensive review of Senate Bill 589 and its implications for electricity wheeling in Hawaii. The Utilities are currently awaiting further direction from the PUC as mandated by Act 266. For more information on Act 266, see discussion in "Regulatory and legislative development" above.
Decoupling.See "Decoupling" in Note 4 of the Condensed Consolidated Financial Statements for a discussion of decoupling.
Regulated returns.As part of the PBR Framework's annual review cycle, the Utilities track their rate-making ROACEs as calculated under the earnings sharing mechanism, which includes only items considered in establishing rates. At year-end, each utility's rate-making ROACE is compared against its ROACE allowed by the PUC to determine whether earnings sharing has been triggered. The D&O in the PBR proceeding modified the earnings sharing mechanism to a symmetric arrangement. Effective with annual earnings for 2021, the earnings sharing will be triggered for achieved rate-making ROACE outside of a 300 basis points dead band above and below the current authorized rate-making ROACE of 9.5% for each of the Utilities. Earnings sharing credits or recoveries will be included in the biannual report (formally known as annual decoupling filing) to be filed with the PUC in the spring of the following year.
On August 31, 2023, the PUC issued an order temporarily suspending the Earnings Sharing Mechanism (ESM) until further notice. The intent of the order is to address the unintended consequence of customers potentially bearing the costs associated with the Maui windstorm and wildfires through the operation of the ESM without prior PUC review. In accordance with the order, the earnings sharing adjustment for 2024 is zero. As of June 30, 2025, ESM remains suspended.
Actual and PUC-allowed returns, as of June 30, 2025, were as follows:
%
Rate-making Return on rate base*
ROACE** Rate-making ROACE***
Twelve months ended
June 30, 2025
Hawaiian Electric Hawaii Electric Light Maui Electric Hawaiian Electric Hawaii Electric Light Maui Electric Hawaiian Electric Hawaii Electric Light Maui Electric
Utility returns 7.68 5.92 4.29 5.38 3.53 (1.96) 9.83 6.92 3.74
PUC-allowed returns 7.37 7.52 7.43 9.50 9.50 9.50 9.50 9.50 9.50
Difference 0.31 (1.60) (3.14) (4.12) (5.97) (11.46) 0.33 (2.58) (5.76)
* Based on recorded operating income and average rate base, both adjusted for items not included in determining electric rates.
** Recorded net income divided by average common equity.
*** ROACE adjusted to remove items not included by the PUC in establishing rates, such as incentive compensation.
Rate-making calculations remove the impacts of the Settlement Agreements and eliminate the balances for the asset-based lending facility (ABL Facility) on a stand-alone company basis. The Utilities have stated that customers will not be impacted by
payments related to the Settlement Agreements for the Maui windstorm and wildfires, which are expected to be $1.9 billion(see Note 2 of the Condensed Consolidated Financial Statements). The ABL Facility contains certain intercompany costs related to the ABL Facility that are eliminated on a consolidated basis, and these transactions are eliminated on a stand-alone company basis for rate-making. Therefore, the rate-making returns were adjusted to exclude these impacts.
If the Utilities were to exclude the impact of the Settlement Agreements, the book ROACE as of June 30, 2025 would be 8.61%, 5.68% and 2.80% for Hawaiian Electric, Hawaii Electric Light and Maui Electric, respectively, resulting in 7.22% on a consolidated basis.
The gap between PUC-allowed ROACEs and the ROACEs achieved is generally due to the exclusion of certain expenses from rates (for example, incentive compensation and charitable contributions), and depreciation, other operation and maintenance (O&M) expense and return on rate base that are in excess of what is currently being recovered through rates (the last rate case plus authorized RAM adjustments and ARA revenues).
Regulatory proceedings.On December 23, 2020, the PBR D&O was issued, establishing the PBR Framework. The PBR Framework implemented a five-year multi-year rate period (MRP), during which there will be no general rate case applications. In the fourth year of the MRP, the PUC will comprehensively review the PBR Framework to determine if any modifications or revisions are appropriate. See also "Regulatory proceedings" in Note 4 of the Condensed Consolidated Financial Statements.
Developments in renewable energy efforts. The Utilities' renewable energy goals depend, in large part, on the success of renewable projects developed and operated by independent power producers. Beginning in 2017, the Utilities embarked on an ambitious procurement effort, selecting multiple solar plus storage projects to help reach the Utilities' renewable portfolio standards goals as well as to assist the Utilities in retiring fossil fuel generation. Several of the Stage 1 and Stage 2 projects have experienced delays as a result of supply chain disruptions caused by impacts from the COVID-19 pandemic, solar product detentions at U.S. ports of entry ordered by the U.S. Customs and Border Protection agency, and unforeseen site conditions which resulted in unanticipated project costs or in some cases the inability to effectively use previously identified project sites. These impacts have resulted in five Stage 2 projects declared null and void by the independent power producers and one Stage 1 project and one Stage 2 project mutually terminating their power purchase agreements (PPAs) with the Utilities. The Utilities negotiated amendments with several project developers regarding requests to increase previously approved prices and extend guaranteed commercial operations dates for those projects in order to ensure their viability given the impact of these recent market conditions. All of these amendments were approved. Significant project delays or failures of these projects increase the risk of the Utilities not meeting the renewable portfolio standards or other climate related goals, eligibility for performance incentive mechanisms associated with the speed of increasing renewable generation, and the ability to retire fossil fuel units. Developments in the Utilities' efforts to further their renewable energy strategy include renewable energy projects discussed in Note 4 of the Condensed Consolidated Financial Statements and the following:
New renewable PPAs.
•Under a request for proposal process governed by the PUC and monitored by independent observers, in February 2018, the Utilities issued Stage 1 Renewable RFPs for 220 MW of renewable generation on Oahu, 50 MW of renewable generation on Hawaii Island, and 60 MW of renewable generation on Maui. The Utilities filed seven requests with the PUC for approval of amendments related to previously-approved PPAs for changes in pricing and/or guaranteed commercial operations dates to support completion of the projects while maintaining system reliability. The PUC has approved all seven amendments. Hale Kuawehi Solar on Hawaii Island reached commercial operations on March 25, 2025, and Hoohana Solar on Oahu reached commercial operations on July 11, 2025. See also "Purchase commitments" in Note 4 of the Condensed Consolidated Financial Statements. All seven Stage 1 projects have now reached commercial operations.
A summary of the seven PPAs is as follows:
Utilities Number of contracts Total photovoltaic size (MW) BESS Size (MW/MWh)
Commercial operation dates
Contract term (years)
Total projected annual lump sum payment (in millions)
Hawaiian Electric 4 139.5 139.5/558
7/31/22, 1/11/23, 3/28/24 & 7/11/25
20 & 25 $ 34.0
Hawaii Electric Light 2 60 60/240
4/21/23 & 3/25/25
25 19.2
Maui Electric 1 60 60/240 5/31/24 25 13.2
Total 7 259.5 259.5/1038 $ 66.4
The Utilities have received PUC approvals to recover the total projected annual payment of $66.4 million for the seven PPAs through the PPAC to the extent such costs are not included in base rates.
•In continuation of their February 2018 request for proposal process, the Utilities issued their Stage 2 Renewable RFPs for Oahu, Maui and Hawaii Island and Grid Services RFP on August 22, 2019. Of the 11 PPAs filed by the Utilities, six PPAs were declared null and void by the independent power producers and one PPA was mutually terminated. The four remaining projects have received PUC approval. The Utilities filed three requests with the PUC for approval of amendments related to previously-approved PPAs for changes in pricing and/or guaranteed commercial operations dates to support completion of the projects while maintaining system reliability. The PUC approved all three amendments. To date, two projects reached commercial operations. See also "Purchase commitments" in Note 4 of the Condensed Consolidated Financial Statements. Additionally, two Grid Services Purchase Agreements and two applications for commitments of funds for capital expenditures for approval of the utility self-build projects were filed with the PUC. The two Grid Services Purchase Agreements were approved by the PUC in December 2020. One of the aggregators has had financial difficulties and therefore, Hawaiian Electric terminated the Grid Services Purchase Agreement contract on January 29, 2025. On February 7, 2025, Hawaiian Electric requested for approval for an interim solution for the roughly 1,200 stranded customers to the PUC. Hawaiian Electric will proceed with implementing the alternative solution, pending PUC approval.
A summary of the remaining four approved Stage 2 PPAs, is as follows:
Utilities Number of contracts Total photovoltaic size (MW) BESS Size (MW/MWh) Guaranteed commercial operation dates Contract term (years)
Total projected annual lump sum payment (in millions)
Hawaiian Electric 3 79 79 / 443
5/17/24*, 6/7/24 & 9/1/24*
20 & 25 $ 31.4
Hawaiian Electric 1 N/A 185 / 565 12/19/23 20 24.0
Total 4 79 264 / 1,008 $ 55.4
* Project delays have resulted in Guaranteed Commercial Operations Date being missed.
The total projected annual payment of $55.4 million for these PPAs will be recovered through the PPAC to the extent such costs are not included in base rates.
A summary of the Grid Services Purchase Agreements that were approved by PUC in December 2020 is as follows:
Utilities Fast Frequency Response - 1
(MW) 		Fast Frequency Response - 2
(MW) 		Capacity -
Load Build
(MW) 		Capacity -
Load Reduction
(MW)
Hawaiian Electric - 26.7 14.5 19.4
Hawaii Electric Light 6.0 - 3.2 4.0
Maui Electric 6.1 - 1.9 4.7
Total 12.1 26.7 19.6 28.1
A summary of the utility Stage 2 self-build projects is as follows:
Utilities
Number of projects
BESS Size (MW/MWh) Guaranteed commercial operation dates
Hawaii Electric Light 1 * 12/12 12/30/22
Maui Electric 1 40/160 11/30/26
Total 2 52/172
* The utility Self-Build project was denied by the PUC on May 25, 2022 and the Utilities filed a motion for reconsideration with the PUC. On January 26, 2024, the PUC granted the Utilities' November 15, 2023 request to suspend the docket to focus on identified priorities. The Utilities provided the PUC with an updated assessment of the project on April 30, 2024 and requested to withdraw the application because the need that was to be served by the project can now be met by Stage 3 RFP resources. On July 8, 2024, the Utilities received approval from the PUC to withdraw the project.
Tariffed renewable resources.
•As of June 30, 2025, there were approximately 696 MW, 153 MW and 161 MW of installed distributed renewable energy technologies (mainly PV) at Hawaiian Electric, Hawaii Electric Light and Maui Electric, respectively, for tariff-based private customer generation programs, namely Standard Interconnection Agreement, Net Energy Metering, Net Energy Metering Plus, Customer Grid Supply, Customer Self Supply, Customer Grid Supply Plus and Interim Smart Export. As of June 30, 2025, an estimated 44% of single-family homes on the islands of Oahu, Hawaii and Maui have installed private rooftop solar systems, and approximately 25% of the Utilities' total customers have solar systems.
•The Utilities' feed-in tariff program is designed to encourage the addition of more renewable energy projects in Hawaii. As of June 30, 2025, there were 44 MW, 2 MW and 6 MW of installed feed-in tariff capacity from renewable energy technologies at Hawaiian Electric, Hawaii Electric Light and Maui Electric, respectively.
Biofuel sources.
•On August 23, 2024, the Utilities issued an RFP for biodiesel fuel supply commencing February 1, 2026. Proposals were due on September 30, 2024, and the Utilities have completed negotiations with two suppliers and submitted an application to the PUC on April 3, 2025. On June 2, 2025, the Utilities and Pacific Biodiesel Technologies, LLC (PBT) signed an agreement for supply of biodiesel that will become effective upon PUC approval.
•On June 30, 2021, the Utilities issued an RFP for all fuels, including biodiesel, for supply commencing January 1, 2023. The Utilities and PBT signed an agreement on December 13, 2021, for supply of biodiesel on all islands commencing January 1, 2023, which was approved by the PUC on December 1, 2022. Hawaiian Electric also has a spot buy contract with PBT to purchase additional quantities of biodiesel at or below the price of diesel. Some purchases of "at parity" biodiesel have been made under the spot purchase contract, which was extended through June 2025.
•Hawaiian Electric has a contingency supply contract with REG Marketing & Logistics Group, LLC to also supply biodiesel to any generating unit on Oahu in the event PBT is not able to supply necessary quantities. This contingency contract has been extended to November 2025 and will continue with no volume purchase requirements.
Requests for renewable proposals, expressions of interest, and information.
•The Hawaii Island Stage 3 RFP, seeking 325 gigawatt-hours (GWh) per year of energy and 65 MW of renewable firm capacity, was issued on November 21, 2022. Proposals were received on April 20, 2023. The Stage 3 RFPs for Oahu and Maui opened for bids on January 20, 2023. For Oahu, the Utilities sought 500 to 700 MW of renewable firm capacity, and at least 965 GWh of renewable dispatchable energy annually. For Maui, the Utilities sought at least 40 MW of renewable firm capacity, and at least 425 GWh of renewable dispatchable energy annually. Proposals for the firm generation portion of the Maui Stage 3 RFP were received on August 17, 2023, and Priority List selections were announced on October 9, 2023. 15 proposals, which included one utility self-build project and one proposal that requires two contracts, were selected to the Final Award Group on December 8, 2023. On February 2, 2024, one additional project totaling 40 MW of firm renewable generation was selected. Of the 16 projects, one solar-plus storage and one firm renewable generation project on Oahu, one solar-plus storage project on Maui, and two solar-plus storage projects on Hawaii Island have been withdrawn by the developers. Contracts for three paired PV with storage projects have been executed and filed with the PUC for approval. On April 21, 2025, the PUC dismissed the three applications without prejudice and directed that new applications be filed upon completion of the respective Interconnection Requirement Study. Negotiations for the projects are ongoing.
A summary of the Stage 3 PPAs is as follows:
Utilities
Number of contracts
Total photovoltaic size (MW)
BESS Size (MW/MWh)
Firm Generation (MW)
Hawaiian Electric
4
126
510
307
Hawaii Electric Light 3
86
374
60
Maui Electric 4 90 240 40
Total 11 302 1,124 407
A summary of the utility Stage 3 self-build project is as follows:
Utilities
Number of projects
Firm Generation (MW)
Hawaiian Electric
1
253
Total 1 253
•On August 19, 2024, the PUC opened a docket for the Utilities' Integrated Grid Planning RFP (IGP RFP). On August 26, 2024, the Utilities filed their draft IGP RFP for Oahu and Hawaii Island. The Oahu portion of the IGP RFP seeks 750 GWh per year of energy and 350 MW of grid forming resources by March 1, 2030, and 81 MW of renewable firm capacity by December 2033. The Hawaii Island portion of the IGP RFP seeks 435 GWh per year of energy and 115 MW of grid forming resources by November 1, 2030, and 30 MW of renewable firm capacity by December 2032. On January 9, 2025, the PUC issued a decision and order (D&O) converting the docket into a contested case proceeding and opened a period for interested parties to move to intervene or participate. An updated draft IGP RFP with
supporting documentation was filed on April 3, 2025. The Utilities' Reply Statement of Position and an updated draft IGP RFP with supporting documentation was filed on May 2, 2025. Multiple supplemental filings were made in June 2025. On July 7, 2025, the PUC issued a D&O extending the procedural schedule to August 18, 2025, to allow parties to the docket to ask information requests and submit Statements of Position.
Legislation and regulation. Congress and the Hawaii legislature periodically consider legislation that could have positive or negative effects on the Utilities and their customers. Also see "Environmental regulation" in Note 4 of the Condensed Consolidated Financial Statements.
Fuel contracts. On June 30, 2021, the Utilities issued two RFPs for all fuels for supply commencing January 1, 2023. On February 1, 2022, the Utilities and PAR Hawaii Refining, LLC (PAR Hawaii) entered into a fuel supply contract (Supply Agreement) commencing January 1, 2023. On December 1, 2022, the PUC issued a D&O approving the PAR Hawaii fuels contract and recovery of associated costs through ECRC. On August 14, 2024, the Utilities entered into a second amendment of the Supply Agreement. The second amendment extends the term of the Supply Agreement by additional three years and creates savings in fuel costs. The second amendment is effective as of June 18, 2025, upon the issuance of the final D&O by the PUC.
On March 3, 2022, as part of economic sanctions amid the Russia-Ukraine war, PAR Hawaii announced that it was suspending all purchases of Russian crude oil, which accounts for at least 25% of Hawaii's supply. The Utilities are taking additional measure to ensure adequate supply of fuel by entering into a backup fuel supply contract with Vitol Inc. (Vitol) commencing on December 1, 2022 through June 30, 2023, with annual extensions if mutually agreed by both parties. The fuel supply contract was extended to June 30, 2026. The PUC issued the final D&O approving the Vitol backup fuels supply contract on December 1, 2022, and the costs incurred under the contract with Vitol are recovered in the Utilities' respective ECRCs.
FINANCIAL CONDITION
Liquidity and capital resources. HEI's and the Utilities' future results of operations involve significant risks and uncertainties. Factors that could affect HEI's and the Utilities' future operating results and could cause actual results to vary materially from expectations include, but are not limited to, access to capital, ability to attract and retain key personnel, and pending or threatened litigation (including recent litigation noted below).
Hawaiian Electric's objective continues to be to operate a strong, financially healthy enterprise to empower a thriving future for Hawaii. While the fundamentals of their business remain strong, the Utilities took prudent and measured actions to strengthen their financial position while continuing to provide reliable service to their customers and reinforcing their commitment to serving the community for the long term. In August 2023, Hawaiian Electric fully drew down $200 million on its existing revolving credit facilities. The cash proceeds were primarily invested in highly liquid short-term investments and used for general corporate purposes. The Utilities have made repayments of $34 million in 2024 and $123 million in the first six months of 2025. Longer term, the Utilities entered into an asset-based credit facility that allows borrowing up to $250 million (see Note 5 of the Condensed Consolidated Financial Statements for a brief description of Hawaiian Electric's revolving credit facilities and asset-based credit facility) and are also evaluating other sources of liquidity that could include securitization, re-prioritizing capital spending and reducing O&M, issuing unsecured debt, and conducting asset sales, among others.
The following table provides the components of available liquidity under existing facilities.
As of June 30, 2025
(in millions)
Capacity
Outstanding
Undrawn
Unsecured revolving line of credit
$ 200 $ 43 $ 157
ABL Facility 225 - 225
Borrowing from HEI - standing commitment letter
75 - 75
Short-term loan credit facility
50 50 -
Total credit
$ 550 $ 93 $ 457
Cash and cash equivalents
106
Total available liquidity from cash and under existing facilities
$ 563
Additionally, as of June 30, 2025, Hawaiian Electric had no commercial paper outstanding, and Hawaii Electric Light and Maui Electric had short-term borrowings from Hawaiian Electric of nil and $69.2 million, respectively, which intercompany borrowings are eliminated in consolidation.
See Note 5 of the Condensed Consolidated Financial Statements for a brief description of Hawaiian Electric's loans.
As discussed in Note 2 of the Condensed Consolidated Financial Statements, HEI and Hawaiian Electric determined that making payments under the terms of the Settlement Agreements in four equal annual installments is the most viable option and have classified the first $479 million installment as a current liability based on expected timing of the payment and the remaining $1.44 billion as a noncurrent liability on the Utilities' Condensed Consolidated Balance Sheet. To finance the first installment payment, in September 2024, HEI completed the sale of 62.2 million shares of common stock in a registered offering, raising net proceeds of approximately $557.7 million. HEI transferred the amount of the first payment, $479 million, into a new subsidiary, GLST1, which is restricted from disbursing such funds except in connection with the initial payments to the settlement funds. HEI expects to make this initial payment in early 2026. In addition, HEI filed a shelf registration statement with the SEC for an at-the-market offering program under which HEI may offer and sell, from time to time at its sole discretion, its common stock, without par value, having an aggregate offering price of up to $250 million. To date, HEI has not sold any common stock under this program.
Management believes that HEI's and the Utilities' current cash and cash equivalents balances, as of June 30, 2025, amounting to $43.7 million and $106.4 million, respectively, the available capacity on Hawaiian Electric's ABL Facility and revolving line of credit (see Note 5 of the Condensed Consolidated Financial Statements), the additional liquidity from HEI's at-the-market offering program, and expenditure reduction efforts, provided sufficient liquidity to fund their operations and satisfy their other obligations for the next 12 months following the issuances of their financial statements.
As of June 30, 2025, the Utilities are in compliance with all applicable financial covenants and expect to continue to be in compliance with all the financial covenants in the next 12 months. However, the Utilities cannot predict the future effects on the Utilities' ability to access additional capital or the future impacts on the Utilities' financial position, results of operations, and cash flows.
The Utilities' liquidity continues to be impacted from the downgrades of their credit ratings, which limits the Utilities from accessing lower cost sources of capital. In addition to liquidity provided from the ABL Facility and revolving line of credit, as well as the standing commitment letter from HEI, the Utilities rely on customer payments until access to the capital markets become less restrictive. Although accounts receivable balances have been decreasing, the higher bad debt expense is expected to continue as moratorium on disconnections on Maui continues while the Utilities are returning to pre-pandemic collection policies, except on Maui. The Maui windstorm and wildfires have not and are not anticipated to materially impact accounts receivable, however, it has and will continue to lead to higher bad debt expense. As of June 30, 2025, approximately $12.1 million of the Utilities' accounts receivables were over 30 days past due, which is a decrease of approximately 34% since December 2024. The higher cash collection since the beginning of the year has benefited the Utilities' liquidity.
With the exception of Maui, the Utilities are continuing the disconnection process and are returning to pre-pandemic level of collections policy. Service disconnections on Maui have been suspended through September 4, 2025, in accordance with the extension of Governor Josh Green's emergency proclamation; however, efforts are ongoing to educate and inform customers impacted by the Maui windstorm and wildfires on the availability of financial assistance to manage delinquencies accordingly. See also "Regulatory assets and liabilities" in Note 4 of the Condensed Consolidated Financial Statements.
The rebuilding of Lahaina will be a community-led effort and will occur over an extended period of time. The cost of rebuilding the electric utility infrastructure is not yet known, but could be significant because the infrastructure that may be required is expected to be different than what previously existed. For example, to mitigate wildfire risk, grid hardening strategies, such as undergrounding of lines in high-risk locations will be significantly more expensive than using overhead lines and will thus result in increased costs.
Prior to the Maui windstorm and wildfires, Hawaiian Electric utilized short-term debt, typically commercial paper, to support normal operations, to refinance short-term debt and for other temporary requirements. Hawaiian Electric may also borrow short-term from HEI for itself and on behalf of Hawaii Electric Light and Maui Electric, and Hawaiian Electric may borrow from or loan to Hawaii Electric Light and Maui Electric on a short-term basis. The intercompany borrowings among the Utilities, but not the borrowings from HEI, are eliminated in the consolidation of Hawaiian Electric's financial statements. The Utilities also historically utilized long-term debt, borrowings of the proceeds of special purpose revenue bonds issued by the State of Hawaii Department of Budget and Finance and the issuance of privately placed unsecured senior notes bearing taxable interest, to finance the Utilities' capital improvement projects, or to repay short-term borrowings used to finance such projects. The downgrades of Hawaiian Electric's credit ratings will continue to adversely impact the Utilities' ability to access capital markets and other sources of debt and equity financing, if at all, in a timely manner and on acceptable terms.
Credit ratings. On May 28, 2025, June 4, 2025 and June 27, 2025, Moody's, Fitch and S&P, respectively, upgraded the credit ratings of Hawaiian Electric as follows:
Fitch
Moody's
S&P
From1
To
From1
To
From1
To
Long-term issuer default, long-term and issuer credit, respectively
B
BB-
Ba3
Ba2
B- B+
Short-term issuer default, commercial paper and commercial paper, respectively
B
B NP NP B B
Senior unsecured debt/special purpose revenue bonds B+ B+ Ba3 Ba3 * *
Cumulative preferred stock (selected series) * * B3 B3 * *
Outlook Stable
Positive
Stable
Positive
Negative
Watch Positive
1As of December 31, 2024. In March 2025, S&P revised Hawaiian Electric's outlook to "Positive" from "Negative" and affirmed the "B-" issuer credit rating.
* Not rated.
Note: The above ratings reflect only the view, at the time the ratings are issued or affirmed, of the applicable rating agency, from whom an explanation of the significance of such ratings may be obtained. Such ratings are not recommendations to buy, sell or hold any securities; such ratings may be subject to revision or withdrawal at any time by the rating agencies; and each rating should be evaluated independently of any other rating.
Taxable debt. On July 24, 2025, the Utilities received PUC approval to issue during the three-year period 2025 through 2027, unsecured obligations bearing taxable interest (Hawaiian Electric up to $900 million, Hawaii Electric Light up to $115 million and Maui Electric up to $150 million), to finance capital expenditures, repay long-term and/or short-term debt used to finance or refinance capital expenditures, and/or to reimburse funds used for payment of capital expenditures.
As of June 30, 2025, the Utilities have $1.8 billion of long-term debt and short-term debt, of which $175 million is due or expected to be repaid within 12 months and $218 million is due within 24 months.
Equity. On December 20, 2022, the Utilities received PUC approval to issue and sell each utility's common stock over a four-year period from January 1, 2023 through December 31, 2026 (Hawaiian Electric's sale/s to HEI of up to $75 million, Hawaii Electric Light sale/s to Hawaiian Electric of up to $25 million, and Maui Electric sale/s to Hawaiian Electric of up to $55 million) and the purchase of Hawaii Electric Light and Maui Electric common stock by Hawaiian Electric from 2023 through December 31, 2026. As of June 30, 2025, Hawaiian Electric, Hawaii Electric Light, and Maui Electric have $75 million, $25 million, and nil, respectively, of unused common stock authorization.
On January 27, 2025, the Utilities requested PUC approval to issue and sell each utility's common stock over a three-year period from January 1, 2025 through December 31, 2027 (Hawaiian Electric sale/s to HEI of up to $210 million, Hawaii Electric Light sale/s to Hawaiian Electric of up to $70 million, and Maui Electric sale/s to Hawaiian Electric of up to $145 million) and the purchase of Hawaii Electric Light and Maui Electric common stock by Hawaiian Electric from 2025 through December 31, 2027. If approved, the Utilities would forgo the unused common stock authorization noted in the foregoing paragraph above. The Utilities requested PUC approval by October 31, 2025.
Cash flows. The following table reflects the changes in cash flows for the six months ended June 30, 2025 compared to the six months ended June 30, 2024:
Six months ended June 30
(in thousands) 2025 2024 Change
Net cash provided by operating activities $ 216,246 $ 185,473 $ 30,773
Net cash used in investing activities (154,799) (166,657) 11,858
Net cash used in financing activities
(139,166) (36,273) (102,893)
Net cash provided by operating activities.The increase in net cash provided by operating activities was primarily driven by lower cash paid for fuel oil stock due to lower fuel oil prices, offset by higher customer payments received in 2024 due to government and other assistance program and higher customer bills.
Net cash used in investing activities. The decrease in net cash used in investing activities was primarily driven by a decrease in capital expenditures related to construction activities.
Net cash used in financing activities. The increase in net cash used in financing activities was largely driven by the repayment of the revolving credit facility.
Material cash requirements. Material cash requirements of the Utilities include payments related to settlement of tort-related legal claims and cross claims, legal and consulting costs related to the Maui windstorm and wildfires (see further
information in Note 2 of the Condensed Consolidated Financial Statements), O&M expenses, labor and benefits costs, fuel and purchase power costs, debt and interest payments, operating and finance lease obligations, their forecasted capital expenditures (including capital expenditures related to wildfires and wildfire mitigations) and investments, their expected retirement benefit plan contributions and other short-term and long-term material cash requirements. The cash requirements for O&M, fuel and purchase power costs, debt and interest payments, and operating and finance lease obligations are generally funded through the collection of the Utilities' revenue requirement established in the last rate case and other mechanisms established under the regulatory framework. The cash requirements for capital expenditures are generally funded through operating cash flows, the issuance of debt, and contributions of equity from HEI and generally recovered through the Utilities' revenue requirement or other capital recovery mechanisms over time.
Hawaiian Electric's consolidated capital structure was as follows:
(dollars in millions) June 30, 2025 December 31, 2024
Short-term borrowings, net $ 49 1 % $ 49 1 %
Long-term debt, net 1,732 52 1,901 61
Preferred stock 34 1 34 1
Common stock equity 1,522 46 1,157 37
$ 3,337 100 % $ 3,141 100 %
The Utilities' credit rating downgrades related to the Maui windstorm and wildfires will continue to adversely impact their ability to access capital markets and other sources of debt and equity financing in a timely manner and on acceptable terms. Through the sale of common stock in September 2024, HEI has raised sufficient cash to pay the first installment of the settlement of wildfire tort claims expected to be made in early 2026. HEI is currently working with its financial advisors on a financing plan to raise the additional capital required to fund the remaining wildfire tort claims. While management believes that HEI will be able to raise the necessary capital, there is no assurance that management's plans will be successful. The potential damages and losses related to the Maui windstorm and wildfires and related lawsuits (see further information in Note 2 of the Condensed Consolidated Financial Statements), the economic impact of higher fuel prices, inflation, higher interest rates, tightening of monetary policy, and geopolitical situations, create significant uncertainty, and the Utilities cannot predict the extent or duration of these conditions, the future effects that these conditions will have on the Utilities' financing plan, cost of capital and their ability to access additional capital, or the future impacts on the Utilities' financial position, results of operations, and cash flows.
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