ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
HEI and Hawaiian Electric (in the case of Hawaiian Electric, only the information related to Hawaiian Electric and its subsidiaries):
The following discussion should be read in conjunction with the Consolidated Financial Statements and the related Notes that appear in Item 8 of this report. For information on factors that may cause HEI’s and Hawaiian Electric’s actual future results to differ from those currently contemplated by the relevant forward-looking statements, see “Cautionary Note Regarding Forward-Looking Statements” at the front of this report and “Risk Factors” in Item 1A. The general discussion of HEI’s consolidated results should be read in conjunction with the Electric utility discussion that follows.
Executive overview and strategy. HEI is a holding company with operations primarily focused on Hawaii’s electric utility sector after selling its bank operations on December 31, 2024. In 2017, HEI formed Pacific Current to make investments in non-regulated renewable energy and sustainable infrastructure projects. On December 30, 2024, HEI, ASB, and ASB Hawaii, a wholly owned subsidiary of HEI and ASB’s parent holding company, entered into investment agreements to sell 90.1% of the common stock of ASB to various investors, including certain ASB officers and directors of ASB. The sale transaction closed on December 31, 2024 and no investor acquired more than 9.9% of the common stock of ASB. The proceeds from the sale were used to repay a ratable portion of each of HEI’s senior notes in April 2025. Subsequent to the sale, HEI has one reportable segment: Electric utility. HEI and its other subsidiaries which are not reportable segments are grouped and reported as an “All Other” non-reportable segment.
Electric utility. Hawaiian Electric, Hawaii Electric Light and Maui Electric (Utilities) are regulated operating electric public utilities engaged in the production, purchase, transmission, distribution and sale of electricity on the islands of Oahu; Hawaii; and Maui, Lanai and Molokai, respectively.
All Other. The All Other segment primarily comprises the results of Pacific Current, which invested in non-regulated clean energy and sustainable infrastructure in the State of Hawaii to help reach the state’s sustainability goals, and HEI’s corporate-level operating, general and administrative expenses. Subsequent to the Maui windstorm and wildfires, HEI and Pacific Current have suspended new investments and undertook a comprehensive review of strategic options for the assets of Pacific Current. As part of HEI’s comprehensive review of strategic options for Pacific Current, all investments of Pacific Current that were made through its subsidiaries were sold in 2025, except for Mahipapa, its remaining operating subsidiary which is in the process of being sold. The All Other segment also includes ASB Hawaii, which previously owned ASB, and a 40% interest in GLST1, an entity created for the specific purpose of holding HEI’s and Hawaiian Electric’s first liability installment payment pursuant to the settlement agreements to settle the tort-related claims in the litigation arising out of the Maui windstorm and wildfires.
A major focus of HEI’s financial strategy is to grow core earnings/profitability at the Utilities in a controlled risk manner and optimize operating, capital and tax efficiencies in order to support its dividend and deliver shareholder value. HEI also continues to work on strategic financing plans to raise capital necessary to fund the settlement of wildfire tort claims.
Recent developments. See also “Recent developments” in Hawaiian Electric’s MD&A and Note 2 of the Consolidated Financial Statements which includes recent updates and disclosures relating to the Maui windstorm and wildfires.
On September 5, 2025, HEI and Hawaiian Electric each amended their senior unsecured revolving credit facility (the HEI Revolving Facility and the Hawaiian Electric Revolving Facility, respectively) resulting in increased borrowing capacities and available liquidity. HEI increased its revolving commitments available under the HEI Revolving Facility to $300 million from $175 million and extended the termination date to September 5, 2030 from May 14, 2027. Hawaiian Electric increased its revolving commitments available under the Hawaiian Electric Revolving Facility to $300 million from $200 million and extended the termination date to September 4, 2026, subject to an automatic extension to the earlier of (i) such date specified in a final order or approval of the PUC and (ii) if such order or approval is obtained, September 5, 2030. The Hawaiian Electric Revolving Facility also allows for commitment increases of up to an additional $75 million, subject to customary conditions. Refer to Note 6 of the Consolidated Financial Statements for additional terms of the amended credit facilities.
In addition, on September 18, 2025, Hawaiian Electric issued $500 million in unsecured senior notes with an interest rate of 6.00% and maturing on October 1, 2033 (refer to Note 7 of the Consolidated Financial Statements for additional terms of the unsecured senior notes). A portion of the proceeds was used to repay the outstanding balance of the Utilities’ revolving and term loan facilities and the remaining proceeds are intended to be used to 1) finance capital expenditures, 2) repay long-term debt and short-term debt used to finance or refinance capital expenditures, and 3) reimburse funds used for the payment of capital expenditures.
In June 2025, the Utilities submitted a request with the PUC to terminate or suspend the ATRs. Beginning in 2024 and continuing into 2026, HEI has embarked on a strategy to divest all of its affiliated companies other than the Utilities, intending for the Utilities to be HEI’s sole operating companies. Termination of the ATRs would allow implementation of a corporate integration, under which all HEI employees would move to Hawaiian Electric. A few officer positions would manage and operate both HEI and Hawaiian Electric (dual-hatted executives) and the HEI and Hawaiian Electric boards of directors would be composed of a single set of individuals. In September 2025, the PUC dismissed the request without prejudice. In its order, the PUC provided guidance on the topics to be addressed in any future request. On October 31, 2025 HEI and Hawaiian Electric filed a revised request with the PUC to terminate or suspend the ATRs. After responding to information requests from the Consumer Advocate, the Consumer Advocate issued its statement of position on February 4, 2026. The Consumer Advocate supported the approval of the request with the condition that before any recovery of expenses related to HEI, the Utilities should give the Consumer Advocate and the PUC advance notice of likely changes to recovery. HEI and Hawaiian Electric informed the PUC that the docket was ready for decision making on February 5, 2026.
Following a hearing on December 17, 2025, at which the court orally granted final approval of the Class Settlement Agreement and no class member objected, the Maui Circuit Court entered a written order granting such final approval on January 26, 2026. The deadline to file appeals from that order was February 25, 2026, and as of February 26, 2026, no appeal appeared on the docket. As it appears no party appealed the final approval of the Class Settlement Agreement, it appears that such final approval order is now final and unappealable.
The tort Settlement Agreements do not resolve claims with insurers who have asserted or could assert subrogation claims in separate lawsuits, and such insurers are not parties to the Settlement Agreements, but resolving such claims in the manner set forth in the Settlement Agreements (summarized below) is a condition that must be satisfied before any payment is due from the defendants. On December 30, 2025, the court entered judgment in favor of the defendants in the two principal direct subrogation actions brought by various insurers as to all direct subrogation claims except for 16 such claims associated with insureds who had opted out of the class settlement and had not yet settled. On January 21, 2026, certain plaintiff insurers appealed the grant of summary judgment in these two actions. No briefing schedules in these appeals have been set. On November 5, 2025, the parties signed a binding term sheet to settle the Securities Action (the Securities Action Term Sheet) following negotiations facilitated by a mediator. On January 5, 2026, the parties executed a definitive stipulation of settlement (the Securities Action Stipulation of Settlement) that will provide for the complete resolution of the Securities Action in exchange for a payment by the Company of $47.8 million as part of the overall settlement described below. The settlement of the Securities Action is conditioned on, among other things, approval by the boards of the Company and Hawaiian Electric; the finalization and court approval of the Securities Actions stipulation of settlement; the finalization by February 26, 2026 and subsequent court approval of the stipulation of settlement in the Derivative Actions (defined and discussed below); and entry of a judgment of dismissal following final court approval. In connection with the settlement of the Securities Action, there will be no admission of liability by the Company or any defendants and the Company, the defendants, and related persons will receive a customary full release of all claims. On February 26, 2026, the United States District Court for the Northern District of California held a hearing to determine whether to preliminarily approve the Securities Action Stipulation of Settlement. Following the hearing, the court indicated that it will issue an order and set a hearing date for the final approval of the settlement.
In connection with the execution of the Securities Action Term Sheet, HEI accrued, as of December 31, 2025, $47.8 million, and concurrently recorded an insurance reimbursement receivable of an equivalent amount as the recovery of the agreed settlement payment under its directors and officers liability insurance policy is deemed probable.
In addition, on November 5, 2025, the parties signed a binding term sheet (the Derivative Litigation Term Sheet) to settle all of the outstanding derivative actions described above (the Derivative Actions). The Derivative Litigation Term Sheet was signed following negotiations facilitated by a mediator. On December 31, 2025, the parties executed a definitive settlement agreement (the Derivative Litigation Settlement Agreement) that provides for a complete resolution of the claims asserted in the Derivative Actions in exchange for a payment on behalf of the individual defendants by the Company’s insurers in the amount of $100 million, which will be used in part to pay the $47.8 million for the Securities Action Stipulation of Settlement and fees and expenses for plaintiffs’ counsel. The settlement of the Derivative Actions is conditioned on, among other things, the approval by the boards of HEI and Hawaiian Electric (including their independent directors) of the Derivative Litigation Settlement Agreement; final court approval of the Derivative Litigation Settlement Agreement; and entry of final judgment and orders of dismissal in the Derivative Actions. The plaintiffs’ counsel intends to request court approval for attorneys’ fees of 25% of the settlement proceeds, plus expenses not to exceed $475,000. In connection with the settlement of the Derivative Actions, there will be no admissions of liability, and the defendants and related persons will receive a customary full release of all claims. On March 9, 2026, the United States District Court for the District of Hawaii is scheduled to hold a hearing to determine whether to preliminarily approve the Derivative Litigation Settlement Agreement.
The Derivative Litigation Settlement Agreement calls for the settlement to be fully funded by the Company’s directors and officers liability insurance policies. As noted above, $47.8 million of the $100 million total will be used to fund the settlement
of the Securities Action. The remaining amount, any award in the Derivative Actions for the plaintiffs’ attorneys’ fees and expenses, and payment of other settlement-related expenses provided for in the term sheet, is accounted for as a contingent gain which will be recognized when realized or realizable.
On February 13, 2026, Hawaiian Electric Industries, Inc., Hawaiian Electric Company, Inc., and Maui Electric Company, Limited (collectively, the Hawaiian Electric Plaintiffs) filed suit against five of their insurers: Defendants XL Insurance Company of America, Inc., Allianz Global Risks US Insurance Company, the Princeton Excess and Surplus Lines Insurance Company, and General Security Indemnity Company of Arizona (the Insurers). The Insurers are commercial property insurers that insured the Hawaiian Electric Plaintiffs at the time of the August 2023 Maui windstorm and wildfires. The Insurers have acknowledged coverage under the policies at issue for loss or damage to the Hawaiian Electric Defendants’ property and have paid a portion of the companies’ losses. However, the parties dispute the extent of the damage, the nature of coverage, and apportionment under the policies. Therefore, the Hawaiian Electric Plaintiffs seek declaratory relief regarding the extent of the Insurers’ obligations under the policies, as well as a determination that the Insurers have breached the policies.
Sustainability. At HEI, sustainability principles have long been embedded as applicable within the Company’s activities and are integral to the Company’s efforts to create value for all of its stakeholders. With all of its operations isolated in the middle of the Pacific Ocean, the Company’s long-term health and financial performance are inextricably linked with the strength of the Hawaii economy, its communities, and the environment. That is why long-term shareholder and broader stakeholder value are both served by the Company’s efforts to serve as a catalyst for a better Hawaii.
In 2021, the Company identified a number of priorities that reflect the essential connection between the health of Hawaii’s environment, economy and communities and HEI’s long-term success. Those sustainability priorities included:
•decarbonizing the Company’s operations and the broader Hawaii economy;
•promoting Hawaii’s economic health and improving affordability for all residents;
•ensuring resilience, including safety, as the Company adapts to evolving climate dynamics, which are exacerbating conditions that can lead to increasing risk of droughts, severe storms, flooding, wildfires and other extreme weather events and natural disasters;
•maintaining resilience as the Company navigates the clean energy transition;
•advancing digitalization of the Company’s operations to better serve customers and increase efficiency while protecting against cyber-security challenges;
•promoting inclusion both within the Company and in the ways the Company interacts with and impacts external stakeholders;
•increasing employee engagement; and
•identifying and integrating climate-related risks and opportunities throughout the Company’s planning and decision-making.
The Company has integrated sustainability considerations as appropriate into governance structures, strategies and risk management. This includes:
•full HEI Board review of sustainability-related strategies, Audit & Risk Committee oversight of sustainability-related risks, Compensation & Human Capital Management Committee responsibility for sustainability-related compensation matters and human capital management and Nominating and Corporate Governance Committee responsibility for ensuring an appropriate board governance framework is in place with respect to sustainability.
•robust sustainability and risk management expertise among board members, including directors with direct experience in renewable energy, policy and strategy in the context of evolving climate dynamics, and risk and environmental management.
•sustainability goals incorporated as part of HEI and Utility executive incentive compensation as appropriate.
•sustainability considerations explicitly woven into strategic planning efforts and enterprise risk management processes.
The Company is committed to transparency and providing information to allow customers, community leaders, investors and other stakeholders to understand how the Company’s strategies and operations advance sustainability and long-term stakeholder value creation.
The Company issued its first consolidated sustainability report in September 2020. The report was aligned with Sustainability Accounting Standards Board guidance. The Company has since further developed its sustainability reporting to include disclosures regarding risks and opportunities related to evolving climate dynamics, as well as associated risk management and governance processes, based on recommendations from the Task Force on Climate-related Financial Disclosures. It has also outlined key impacts for the Company under two climate scenarios, including a scenario targeted to limit global temperature rise to two degrees Celsius or lower. The Company’s most recent reports include HEI’s enterprise-
wide GHG emissions inventory. Net enterprise-wide GHG emissions in measured categories have decreased over time, driven largely by reductions in the utility’s generation-related emissions intensity. The Company’s sustainability reports can be found at www.hei.com/sustainability.
HEI consolidated results of operations.
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| (dollars in millions, except per share amounts) | 2025 | | % change | | 2024 | | % change | | 2023 |
| Revenues | $ | 3,087 | | | (4) | | | $ | 3,220 | | | (2) | | | $ | 3,288 | |
Operating income (loss) | 235 | | | NM | | (1,707) | | | NM | | 275 | |
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| Income (loss) from continuing operations for common stock | $ | 123 | | | NM | | $ | (1,323) | | | NM | | $ | 146 | |
Income (loss) from discontinued operations1 | — | | | 100 | | | (103) | | | NM | | 53 | |
Net income (loss) for common stock | $ | 123 | | | NM | | $ | (1,426) | | | NM | | $ | 199 | |
| Net income (loss) by segment: | | | | | | | | | |
| Electric utility | $ | 168 | | | NM | | $ | (1,226) | | | NM | | $ | 194 | |
| Other | (45) | | | 53 | | | (96) | | | (100) | | | (48) | |
| Income (loss) from continuing operations for common stock | $ | 123 | | | NM | | $ | (1,323) | | | NM | | $ | 146 | |
Continuing operations - Basic earnings (loss) per common share | $ | 0.71 | | | NM | | $ | (10.42) | | | NM | | $ | 1.33 | |
Discontinued operations - Basic earnings (loss) per common share1 | — | | | 100 | | | (0.81) | | | NM | | 0.49 | |
Basic earnings (loss) per share | $ | 0.71 | | | NM | | $ | (11.23) | | | NM | | $ | 1.82 | |
| Continuing operations - Diluted earnings (loss) per common share | $ | 0.71 | | | NM | | $ | (10.42) | | | NM | | $ | 1.33 | |
Discontinued operations - Diluted earnings (loss) per common share1 | — | | | 100 | | | (0.81) | | | NM | | 0.48 | |
Diluted earnings (loss) per share | $ | 0.71 | | | NM | | $ | (11.23) | | | NM | | $ | 1.81 | |
| Dividends per share | $ | — | | | — | | | $ | — | | | (100) | | | $ | 1.08 | |
| Weighted-average number of common shares outstanding (millions) | 172.6 | | | 36 | | | 126.9 | | | 16 | | | 109.7 | |
| Dividend payout ratio | — | % | | | | — | % | | | | 59 | % |
1 Includes the results of ASB’s operations through the date of the sale of the common shares, and the loss on the sale of the common shares. See Note 5 of the Consolidated Financial Statements for more information.
Note: Totals may not foot due to rounding.
In 2025, income (loss) from continuing operations for HEI common stock increased to $123 million compared to $(1,323) million in 2024, due to $1,395 million lower net income in 2024 at the Utilities as a result of recording $1,875 million of provision, net, for wildfire tort-related claims in 2024. In 2024, income (loss) from continuing operations for HEI common stock decreased to $(1,323) million compared to $146 million in 2023, due to $(1,420) million lower net income at the Utilities as a result of recording $1,875 million of provision, net, for wildfire tort-related claims in 2024. See “Electric utility” and “HEI Consolidated—All Other segment” sections below for additional information on year-to-year fluctuations.
The Company’s effective tax rate (combined federal and state income tax rates) was 24% (tax expense) in 2025, compared to 26% (tax benefit) in 2024. The Company’s effective tax rate was lower than 2024 primarily due to the substantial pre-tax loss in 2024 resulting from the Utilities’ 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 tax rate in 2024, partially offset by recapture of investment tax credits and lower research and development tax credit claims in 2025.
Maui windstorm and wildfires related expenses, net. The Company’s incremental expenses related to the Maui windstorm and wildfires, as discussed in Note 2 of the Consolidated Financial Statements, for the years ended December 31, 2025, 2024 and 2023 were as follows:
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| | Year ended December 31, 2025 | | | |
| (in thousands) | | Electric utility | | | | All Other segment | | HEI Consolidated | | | |
Maui windstorm and wildfires related expenses: | | | | | | | | | | | |
| | | | | | | | | | | |
| Legal expenses | | $ | 15,685 | | | | | $ | 8,698 | | | $ | 24,383 | | | | |
Outside services expense | | — | | | | | 135 | | | 135 | | | | |
| | | | | | | | | | | |
Wildfire securities-related claims | | — | | | | | 47,750 | | | 47,750 | | | | |
Other expense | | 23,295 | | | | | 522 | | | 23,817 | | | | |
| Interest expense | | 2,543 | | | | | 848 | | | 3,391 | | | | |
Total Maui windstorm and wildfires related expenses | | 41,523 | | | | | 57,953 | | | 99,476 | | | | |
Insurance recoveries1 | | (1,129) | | | | | (54,049) | | | (55,178) | | | | |
Deferral treatment approved by the PUC2 | | (27,826) | | | | | — | | | (27,826) | | | | |
Total Maui windstorm and wildfires related expenses, net of insurance recoveries and approved deferral treatment | | $ | 12,568 | | | | | $ | 3,904 | | | $ | 16,472 | | | | |
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| | Year ended December 31, 2024 | | |
| (in thousands) | | Electric utility | | | | All Other segment | | HEI Consolidated5 | | |
Maui windstorm and wildfires related expenses: | | | | | | | | | | |
| | | | | | | | | | |
| Legal expenses | | $ | 51,406 | | | | | $ | 18,373 | | | $ | 69,779 | | | |
Outside services expense | | 8,500 | | | | | 2,514 | | | 11,014 | | | |
| | | | | | | | | | |
Wildfire tort-related claims3 | | 1,915,000 | | | | | — | | | 1,915,000 | | | |
Other expense4 | | 32,753 | | | | | 2,650 | | | 35,403 | | | |
| Interest expense | | 11,168 | | | | | 3,666 | | | 14,834 | | | |
Total Maui windstorm and wildfires related expenses | | 2,018,827 | | | | | 27,203 | | | 2,046,030 | | | |
Insurance recoveries | | (85,781) | | | | | (8,918) | | | (94,699) | | | |
Deferral treatment approved by the PUC2 | | (37,960) | | | | | — | | | (37,960) | | | |
Total Maui windstorm and wildfires related expenses, net of insurance recoveries and approved deferral treatment | | $ | 1,895,086 | | | | | $ | 18,285 | | | $ | 1,913,371 | | | |
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| | Year ended December 31, 2023 |
| (in thousands) | | Electric utility | | | | All Other segment | | HEI Consolidated5 |
Maui windstorm and wildfires related expenses: | | | | | | | | |
| | | | | | | | |
| Legal expenses | | $ | 24,737 | | | | | $ | 9,232 | | | $ | 33,969 | |
Outside services expense | | 10,532 | | | | | 1,492 | | | 12,024 | |
| | | | | | | | |
Wildfire tort-related claims | | 75,000 | | | | | — | | | 75,000 | |
Other expense | | 3,316 | | | | | 203 | | | 3,519 | |
| Interest expense | | 1,223 | | | | | 1,377 | | | 2,600 | |
Total Maui windstorm and wildfires related expenses | | 114,808 | | | | | 12,304 | | | 127,112 | |
Insurance recoveries | | (98,613) | | | | | (5,967) | | | (104,580) | |
Deferral treatment approved by the PUC2 | | (14,692) | | | | | — | | | (14,692) | |
Total Maui windstorm and wildfires related expenses, net of insurance recoveries and approved deferral treatment | | $ | 1,503 | | | | | $ | 6,337 | | | $ | 7,840 | |
1 HEI consolidated includes insurance recovery related to the proposed settlement of the securities class action of $47.8 million for 2025. Also, includes adjustments related to costs that are no longer probable of recovery under the insurance policies. For 2025, HEI consolidated and Electric utility adjustments amount to $7.6 million of which, $4.5 million were deferred to a regulatory asset, and are reported on the line “Deferral treatment approved by the PUC.”
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 Consolidated Financial Statements.
3 Represents the provision to record the Utilities’ settlement of all wildfire tort-related legal claims and cross claims as of December 31, 2024. See Note 2 of the Consolidated Financial Statements.
4 Includes $18.4 million ($16.6 million by the Utilities) pursuant to an agreement to settle indemnification claims asserted by the State of Hawaii, for 2024. Also includes $3.5 million accrual related to the Utilities’ share of settlement administration fees for 2024. See Note 2 of the Consolidated Financial Statements.
5 Excludes expenses related to discontinued operations amounting to $1.3 million and $11.3 million for 2024 and 2023, respectively.
Note: All Other segment Maui windstorm and wildfires related expenses (legal, outside services, wildfire securities-related claims and other) and insurance recoveries are included in “Expenses-Other” and interest expense is included in “Interest expense, net” on the HEI and subsidiaries Consolidated Statements of Income. See Electric utility section below for more detail.
From August 8, 2023 through December 31, 2025, HEI and its subsidiaries have incurred approximately $2.3 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, the One ‘Ohana Initiative contribution and $47.8 million related to the securities class action settlement. Certain of these costs are reimbursable under excess liability insurance, professional liability insurance, and directors and officers liability insurance policies. As of December 31, 2025, HEI and its subsidiaries have approximately $10 million, nil and $71 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 Initiative contribution), and amounts expected to be recovered for incurred costs, including the securities class action settlement, and recognized as a receivable as of year-end.
With the Company accruing its losses related to a settlement of all wildfire tort-related legal claims and cross claims as of December 31, 2025, the Company expects the Electric utility and HEI to use the remaining $10 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 fourth quarter of 2025, the average daily passenger count was 2.0% lower 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 fourth quarter, international visitor arrivals (excluding Japan) remained 18.0% below 2019 levels. Due to the weak yen, Japanese visitors are 36.6% below 2019 levels.
Hawaii’s seasonally adjusted unemployment rate in December 2025 was 2.2%, lower than the December 2024 rate of 3.0%. The national unemployment rate in December 2025 was 4.4%, slightly higher than the December 2024 rate of 4.1%. According to a recent forecast by UHERO, issued on December 12, 2025, jobs in the State will increase by 0.5% in 2025 before decreasing by 0.3% in 2026.
Hawaii real estate activity through December 2025, as indicated by Oahu’s home resale market, resulted in a 1.5% decrease in the median sales price for condominiums and an increase of 3.5% for single-family homes compared to the same period in 2024. The median single-family home price was $1,100,000 in December 2025, slightly lower than the all-time high of $1,185,000, set earlier this year in February 2025. The number of closed sales through December 2025 saw a 1.1% decrease for condominiums and a 3.5% increase 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 14.7% over the same quarter in the prior year.
At its December 10, 2025 meeting, the Federal Open Market Committee (FOMC) decided to lower the federal funds rate target range to 3.5% to 3.75%. The FOMC noted that economic growth has moderated, with job gains slowing and unemployment edging up. They further noted that uncertainty around the economic outlook remains elevated, and that they remain attentive to risks on both sides of its dual mandate of achieving maximum employment and 2 percent inflation over the longer run.
UHERO forecasts full year 2026 real GDP and real personal income to be flat, a decrease in total visitor arrivals of 1.3%, and an unemployment rate of 3.0% for the State. According to UHERO, Hawaii’s economy is edging into a mild recession, with tourism in a downturn, likely to result in job losses in 2026. Inflation is also expected to increase as the impacts of tariffs
are reflected in consumer prices. Construction continues to be the only major source of economic strength in Hawaii, supported by large federal contracts and ongoing housing and infrastructure needs.
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 (loss)/income includes results of the stand-alone corporate operations of HEI, ASB Hawaii, GLST1, and Pacific Current, including the results of Hamakua Energy and the solar and battery energy storage system facilities up until the close of their respective sales in 2025.
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| (in millions) | | 2025 | | 2024 | | Change | | Primary reason(s) |
Revenue1 | | $ | 16 | | | $ | 13 | | | $ | 3 | | | Increase in other sales at Pacific Current subsidiaries. |
Operating loss1 | | (44) | | | (95) | | | 51 | | | Lower HEI corporate operating loss ($33 million in 2025 vs. $40 million in 2024) primarily due to $12 million lower Maui windstorm and wildfires related costs ($3 million in 2025 vs. $15 million in 2024), partly offset by increases in insurance and incentive compensation expenses. Lower Pacific Current operating loss ($11 million in 2025 vs. $55 million in 2024) primarily due to $35.2 million impairment loss on certain long-lived assets at Pacific Current in the prior year, a $4 million impairment loss on damaged assets in a March 2024 fire at Mahipapa, and Hamakua Energy’s and Mahipapa’s facilities being shut down for repairs in the prior year resulting in higher expense in the prior year. |
Interest expense & other, net | | (24) | | | (45) | | | 21 | | | Primarily due to lower average long-term debt balances (due to $384 million paydown in April 2025) in 2025 than in 2024. |
Interest income | | 27 | | | 13 | | | 14 | | | Primarily due to interest income from the September 2024 common stock offering proceeds. |
Loss on sale of subsidiaries and impairment loss on assets sold and held for sale | | (12) | | | — | | | (12) | | | Sale of Pacific Current subsidiaries and impairment loss on Pacific Current assets sold and held for sale in the current year. |
| Income tax benefit | | 8 | | | 31 | | | (23) | | | Lower pretax loss. |
| Net loss | | $ | (45) | | | $ | (96) | | | $ | 51 | | | |
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.
Note: Totals may not foot due to rounding.
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 a pre-tax loss on the sale amounting to $13.2 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.
In September 2024, Pacific Current recorded a pretax long-lived asset impairment charge of $35.2 million after determining it was more-likely-than-not that the long-lived assets of Pacific Current will be sold significantly before the end of their previously estimated useful life and that the fair value of certain long-lived assets of Pacific Current were less than its carrying value. In addition, HEI forgave its intercompany loan receivable from Mahipapa, including accrued interest, amounting to $9.6 million. Concurrently, Mahipapa classified its intercompany loan payable to HEI, including accrued interest, of an equivalent amount as an equity contribution. These transactions were accounted for as equity transactions and offset in the Company’s Consolidated Balance Sheets. The impairment charge and intercompany loan transactions were non-cash in nature and did not affect the Company’s current liquidity, cash flows or any debt covenants under the Company’s existing credit agreements.
As part of HEI’s comprehensive review of strategic options for certain assets of Pacific Current, 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 3 of the Consolidated Financial Statements for more information.
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 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 previously existing revolving credit facilities. On September 5, 2025, HEI and Hawaiian Electric each entered into a fourth amended and restated credit agreement with a syndicate of eight financial institutions, increasing each of their committed capacities to $300 million (see Note 6 of the Consolidated Financial Statements for additional information). As of December 31, 2025, HEI and Hawaiian Electric had $20 million and nil, respectively, drawn on their revolving credit facilities and no commercial paper outstanding.
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, including the Utilities entering into an asset-based credit facility in May 2024 that allows the Utilities to borrow up to $250 million (see Note 6 of the Consolidated Financial Statements), and HEI registering with the SEC in September 2024 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. In addition, HEI paid down a ratable portion of each of HEI’s senior notes in April 2025 amounting to $384 million, using the proceeds from the December 2024 sale of ASB. Additional proactive measures included suspending the quarterly cash dividend on HEI’s common stock after payment of the second quarter dividend in September 2023, repaying its revolving credit facilities and reducing or eliminating discretionary costs.
As of December 31, 2025, HEI consolidated had $2.4 billion of long-term debt, of which $125 million is due or expected to be repaid within 12 months. In addition, as of December 31, 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 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 the Utilities’ Consolidated Balance Sheets. To finance the first installment payment, in September 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. In November 2024, HEI transferred the first installment payment to GLST1, a wholly owned subsidiary created for the specific purpose of holding the first installment payment pursuant to the settlement of the Maui windstorm and wildfire tort-related legal claims (see Note 2 of the Consolidated Financial Statements). The cash for the first installment payment is classified as restricted cash on the Consolidated Balance Sheet as of December 31, 2025.
At December 31, 2025, the Company’s consolidated total available liquidity was approximately $1,572 million. The following table provides the components of available liquidity at December 31, 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 December 31, 2025.
| | | | | | | | | | | | | | | | | |
| As of December 31, 2025 |
(in millions) | Capacity | | Outstanding | | Undrawn |
Electric utility | | | | | |
Total credit, excluding standing commitment letter with HEI1 | $ | 540 | | | $ | — | | | $ | 540 | |
Total available credit - Electric utility2 | | | | | $ | 540 | |
| | | | | |
All Other | | | | | |
Unsecured revolving line of credit | $ | 300 | | | $ | 20 | | | $ | 280 | |
At-the-market program | 250 | | | — | | | 250 | |
Total credit and other liquidity- All Other | 550 | | | 20 | | | 530 | |
Total available credit and other liquidity - All Other | | | | | $ | 530 | |
| | | | | |
Consolidated cash and cash equivalents | | | | | 502 | |
| Total available liquidity | | | | | $ | 1,572 | |
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 6 of the Consolidated Financial Statements for a description of the HEI and Hawaiian Electric Intercompany Borrowing and Investment Policy.
2 As of December 31, 2025, the Utilities had no commercial paper outstanding. Hawaii Electric Light and Maui Electric had no short-term borrowings from Hawaiian Electric but had long-term intercompany loans from Hawaiian Electric in the amount of $25 million and $90 million, respectively, as of December 31, 2025.
Management believes with the Company’s cash and cash equivalents amount of $502 million and GLST1’s restricted cash amount of $479 million, both as of December 31, 2025, the available capacity on Hawaiian Electric’s ABL Facility, HEI’s and Hawaiian Electric’s increased borrowing capacities of their unsecured lines of credit, and additional liquidity under HEI’s registered at-the-market offering program, 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 no sooner than early 2026) and its other cash obligations for the next 12 months following the issuance of its 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 on favorable 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. See further discussion in “Risk Factors” in Item 1A.
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.
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 remaining operating subsidiary.
Forecasted HEI consolidated “net cash used in investing activities” consists primarily of the net capital expenditures of the Utilities principally related to maintaining and modernizing the grid to allow for the integration of more renewable energy,
improved customer reliability, greater system efficiency and enhanced resilience. The Utilities’ capital expenditures are forecasted to be funded primarily through a combination of retained earnings and proceeds from other sources of debt financings (see also discussion regarding other material cash requirements under “Financial Condition–Liquidity and capital resources,” contained in the “Electric utility” section below). In the future, if the Company is unable to refinance scheduled maturing debt, then debt maturities are expected to be repaid with the proceeds from existing cash on hand, other medium- or long-term debt, and/or dividends from subsidiaries. The ability of Hawaiian Electric to pay dividends or make other distributions to HEI are subject to contractual and regulatory restrictions (see Note 15 of the Consolidated Financial Statements). Additional debt and/or equity financing, if available, may be utilized to invest in the Utilities; to pay down commercial paper or other short-term borrowings, if any; to pay interest costs; or to fund unanticipated expenditures, such as increases in the costs of, or an acceleration of, the construction of capital projects of the Utilities or unanticipated utility capital expenditures. In addition, existing debt may be refinanced prior to maturity with additional debt or equity financing (or both).
Certain Maui windstorm and wildfires legal-related costs of HEI and the Utilities are recoverable under $165 million of excess liability insurance, $25 million of professional liability insurance, and $145 million of directors and officers liability insurance policies (see further information in Note 2 of the Consolidated Financial Statements). As of December 31, 2025, HEI and the Utilities have approximately $10 million, nil and $71 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 Initiative contribution), and amounts expected to be recovered for incurred costs, including the securities class action settlement, and recognized as a receivable as of year-end.
Selected short-term and long-term contractual obligations and commitments. Information about payments under the specified contractual obligations and commitments of HEI and its subsidiaries was as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2025 | Payments due by period |
| (in millions) | 2026 | | 2027 | | 2028 | | 2029 | | 2030 | | After five years | | Total |
| Contractual obligations | | | | | | | | | | | | | |
Long-term debt1 | $ | 125 | | | $ | 100 | | | $ | 139 | | | $ | 35 | | | $ | 189 | | | $ | 1,835 | | | $ | 2,423 | |
Interest on long-term debt2 | 111 | | | 109 | | | 102 | | | 99 | | | 92 | | | 673 | | | 1,186 | |
Maui Windstorm and Wildfire Settlement Agreements3 | 530 | | | 479 | | | 479 | | | 478 | | | — | | | — | | | 1,966 | |
Operating and finance leases | | | | | | | | | | | | | |
| PPAs classified as leases | 60 | | | 60 | | | 55 | | | 55 | | | 55 | | | 793 | | | 1,078 | |
Other leases4 | 16 | | | 11 | | | 6 | | | 7 | | | 7 | | | 13 | | | 60 | |
Hawaiian Electric open purchase order obligations5 | 226 | | | 61 | | | 43 | | | 6 | | | 6 | | | 26 | | | 368 | |
| Hawaiian Electric fuel oil purchase obligations (estimate based on fuel oil price at December 31) | 6 | | | — | | | — | | | — | | | — | | | — | | | 6 | |
Hawaiian Electric purchase power obligations–minimum fixed capacity charges not classified as leases | 117 | | | 121 | | | 120 | | | 120 | | | 120 | | | 946 | | | 1,544 | |
| Liabilities for uncertain tax positions | — | | | 5 | | | — | | | — | | | — | | | — | | | 5 | |
| Total (estimated) | $ | 1,191 | | | $ | 946 | | | $ | 944 | | | $ | 800 | | | $ | 469 | | | $ | 4,286 | | | $ | 8,636 | |
1Amounts do not include $54 million related to Mahipapa debt which are included in liabilities held for sale as of December 31, 2025. See Note 3 of the Consolidated Financial Statements.
2Amounts do not include $4 million of interest on Mahipapa debt which is included in liabilities held for sale as of December 31, 2025. See Note 3 of the Consolidated Financial Statements.
3As of December 31, 2025, HEI and Hawaiian Electric recorded $48 million and $40 million, respectively, of insurance reimbursement receivable related to the securities class action settlement and tort settlement, respectively. See Note 2 of the Consolidated Financial Statements.
4Amounts do not include $6 million related to Mahipapa leases which are included in liabilities held for sale as of December 31, 2025. See Note 3 of the Consolidated Financial Statements.
5Includes contractual obligations and commitments for capital expenditures and expense amounts.
The table above does not include other categories of obligations and commitments, such as deferred taxes, certain trade payables, amounts that will become payable in future periods under collective bargaining and other employment agreements and employee benefit plans and potential refunds of amounts collected from ratepayers (e.g., under the earnings sharing mechanism). As of December 31, 2025, the fair value of the assets held in trusts to satisfy the obligations of the Company’s retirement benefit plans exceeded the retirement benefit plans’ benefit obligation. Minimum funding requirements for retirement benefit plans have not been included in the table above. See Note 11 of the Consolidated Financial Statements for 2026 estimated retirement benefit plan obligations and contributions.
See “Developments in renewable energy efforts—Biofuel sources” in Hawaiian Electric’s MD&A for additional information on fuel oil purchase obligations. See Notes 4 and 9 of the Consolidated Financial Statements for a discussion of power purchase commitments and operating leases obligations, respectively.
Operating activities provided net cash of $391 million in 2025, $487 million in 2024 and $551 million in 2023, of which operating activities from continuing operations provided net cash of $391 million in 2025, $428 million in 2024 and $443 million in 2023. Investing activities used net cash of $322 million in 2025 and $257 million in 2023 and provided net cash of $258 million in 2024, of which investing activities from continuing operations used net cash of $322 million in 2025, $334 million in 2024 and $436 million in 2023. In 2025, 2024 and 2023, net cash used in investing activities from continuing activities was primarily due to capital expenditures.
Financing activities used net cash of $331 million in 2025 and provided net cash of $155 million in 2024 and $196 million in 2023, of which financing activities from continuing operations used net cash of $331 million in 2025 and provided net cash of $498 million in 2024 and $203 million in 2023. In 2025, net cash used in financing activities included repayment of long-term debt, revolving credit facilities and short-term debt and redemption of preferred stock, partly offset by issuance of long-term debt. In 2024, net cash provided by financing activities from continuing operations included issuance of common stock (common stock offering) and increase in short-term debt, partly offset by repayment of long-term debt and revolving credit facilities. In 2023, net cash provided by financing activities from continuing operations included proceeds from revolving credit facilities, long-term debt and short-term debt, partly offset by repayment of long-term and short-term debt, net decreases in short-term borrowings and payment of common and preferred stock dividends.
Other than capital contributions from their parent company, intercompany services (and related intercompany payables and receivables), Hawaiian Electric’s periodic short-term borrowings from HEI (and related interest), if any, and the payment of dividends to HEI, the electric utility is largely autonomous in its operating, investing and financing activities. (See the electric utility segment’s discussion of its cash flows in its “Liquidity and capital resources” section below.) During 2025, Hawaiian Electric paid cash dividends to HEI of $30 million.
In August 2023, due to 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, second and third 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.
A portion of the net assets of Hawaiian Electric is not available for transfer to HEI in the form of dividends, loans or advances without regulatory approval. In the absence of an unexpected material adverse change in the financial condition of the Utilities, such restrictions are not expected to significantly affect the operations of HEI or its ability to meet its debt or other cash obligations. See Note 15 of the Consolidated Financial Statements.
The consolidated capital structure of HEI was as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| December 31 | 2025 | | 2024 |
| (dollars in millions) | | | | | | | |
Short-term borrowings, net | $ | — | | | — | % | | $ | 49 | | | 1 | % |
Long-term debt, net, including current portion of long-term debt, net | 2,410 | | | 60 | | | 2,800 | | | 64 | |
| Preferred stock of subsidiaries | — | | | — | | | 34 | | | 1 | |
| Common stock equity | 1,606 | | | 40 | | | 1,479 | | | 34 | |
| | $ | 4,016 | | | 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 December 31, 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 lower cost sources of capital.
See Notes 6 and 7 of the Consolidated Financial Statements for a brief description of the Company’s loans.
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 of February 17, 2026, the Fitch, Moody’s and S&P ratings of HEI were 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 |
1 As 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.
The Company’s credit rating downgrades related to the Maui windstorm and wildfires will continue to adversely impact its ability to access lower cost sources of capital. Through the sale of common stock in September 2024, the Company has raised sufficient cash to pay the first installment of the settlement of wildfire tort claims expected to be made no sooner than early 2026. The Company is currently working with its financial advisors on a financing plan to raise the additional capital required to fund its remaining 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. The potential damages and losses related to the Maui windstorm and wildfires and related lawsuits (see further information in Note 2 of the Consolidated Financial Statements), the suspension of dividends from Hawaiian Electric, the economic impact of higher fuel prices, inflation, higher interest rates, tightening of monetary policy and geopolitical situations, create significant uncertainty, and the Company cannot predict the extent or duration of these conditions, the future effects that these conditions will have on the Company’s financing plan, cost of capital and its ability to access additional capital, or the future impacts on the Company’s financial position, results of operations, and cash flows.
See Item 1A. Risk Factors for further discussion of risks and uncertainties. See “Credit ratings” in Hawaiian Electric’s MD&A for Hawaiian Electric’s credit ratings. The downgrades of HEI’s and Hawaiian Electric’s credit ratings impacted the Company’s ability to access lower cost sources of capital.
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 HEIRSP 401(k) Plan in 2025, 2024 or 2023 and HEI satisfied the share purchase requirements of the HEIRSP 401(k) Plan through open market purchases of its common stock. There were no new issuances of common stock through the Dividend Reinvestment Program (DRIP) from January 1, 2023 through September 4, 2023, December 6 through December 31, 2023, in 2025 or in 2024 and HEI satisfied the share purchase requirements of the DRIP through open market purchases of its common stock. From September 5 through December 5, 2023, HEI satisfied the share purchase requirements of the DRIP through new issuances of approximately 0.5 million shares of common stock, amounting to $6.6 million, primarily for participants receiving the September 2023 dividend payment.
Off-balance sheet arrangements. Although the Company and the Utilities have certain off-balance sheet arrangements, management has determined that it has no off-balance sheet arrangements that either have, or are reasonably likely to have, a current or future effect on the Company’s and the Utilities’ financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors, including the following types of off-balance sheet arrangements:
1.obligations under guarantee contracts,
2.retained or contingent interests in assets transferred to an unconsolidated entity or similar arrangements that serve as credit, liquidity or market risk support to that entity for such assets,
3.obligations under derivative instruments, and
4.obligations under a material variable interest held by the Company or the Utilities in an unconsolidated entity that provides financing, liquidity, market risk or credit risk support to the Company or the Utilities, or engages in leasing, hedging or research and development services with the Company or the Utilities.
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.
Material estimates that are particularly susceptible to significant change include the amounts reported for pension and other postretirement benefit obligations; contingencies and litigation; income taxes; regulatory assets and liabilities; and asset retirement obligations (AROs). Management considers an accounting estimate to be material if it requires assumptions to be made that were uncertain at the time the estimate was made and changes in the assumptions selected could have a material impact on the estimate and on the Company’s results of operations or financial condition.
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 the policies discussed below 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. The policies affecting both of the Company’s two principal segments are discussed below and the policies affecting just one segment are discussed in the respective segment’s section of “Material estimates and critical accounting policies.” Management has reviewed the material estimates and critical accounting policies with the HEI Audit & Risk Committee and, as applicable, the Hawaiian Electric Audit & Risk Committee.
For additional discussion of the Company’s accounting policies, see Note 1 of the Consolidated Financial Statements and for additional discussion of material estimates and critical accounting policies, see the electric utility discussion below under the same heading.
Pension and other postretirement benefits obligations. The Company’s benefit obligations and reported costs of providing retirement benefits are dependent upon numerous factors resulting from actual plan experience and assumptions about future experience. For example, retirement benefits costs are impacted by actual employee demographics (including age and compensation levels), the level of contributions to the plans, earnings and realized and unrealized gains and losses on plan assets, and changes made to the provisions of the plans. Costs may also be significantly affected by changes in key actuarial assumptions, including the expected return on plan assets, the discount rate and mortality. The Company’s accounting for retirement benefits under the plans in which the employees of the Utilities participate is also adjusted to account for the impact of decisions by the PUC. Changes in obligations associated with the factors noted above may not be immediately recognized as costs on the income statement, but generally are recognized in future years over the remaining average service period of plan participants.
The discount rate used to calculate the Company’s benefit obligations is a significant assumption that affects the Company’s benefit obligations. As of December 31, 2025, the discount rates for HEI and the Utilities’ pension and other benefits plans were 5.78% and 5.67%, respectively. Based on various assumptions in Note 11 of the Consolidated Financial Statements, sensitivities of the projected benefit obligation (PBO) and accumulated postretirement benefit obligation (APBO) as of December 31, 2025, associated with a change in the discount rate, were as follows and constitute “forward-looking statements”:
| | | | | | | | | | | | | | |
| Actuarial assumption | Change in assumption
in basis points | Impact on HEI Consolidated
PBO or APBO | | Impact on Consolidated Hawaiian Electric
PBO or APBO |
| (dollars in millions) | | | | |
| Pension benefits | | | | |
| Discount rate | +/-50 | $(119)/$133 | | $(116)/$130 |
| Other benefits | | | | |
| Discount rate | +/-50 | $(6)/$7 | | $(6)/$7 |
Also, see Notes 1 and 11 of the Consolidated Financial Statements.
Contingencies and litigation. The Company is subject to proceedings (including PUC proceedings), lawsuits and other claims. Management assesses the likelihood of any adverse judgments in or outcomes of these matters as well as potential ranges of probable losses. A determination of the amount of reserves required, if any, for these contingencies is based on an analysis of each individual case or proceeding, often with the assistance of outside counsel. The required reserves may change
in the future due to new developments in each matter or changes in approach in dealing with these matters, such as a change in settlement strategy.
In general, environmental contamination treatment costs are charged to expense, unless it is probable that the PUC would allow such costs to be recovered through future rates, in which case such costs would be capitalized as regulatory assets. Also, environmental costs are capitalized if the costs extend the life, increase the capacity, or improve the safety or efficiency of property; the costs mitigate or prevent future environmental contamination; or the costs are incurred in preparing the property for sale.
As a result of the Maui windstorm and wildfires, HEI and Hawaiian Electric evaluated various financing plans to pay the amounts included in the tort-related Settlement Agreements and determined that paying in four equal annual installments is the most viable option and aligns with the Companies’ expectations of how the settlement amount will be paid. As of December 31, 2025, the Utilities have recorded a settlement accrual of $1.92 billion which reflects their best estimate of the loss contingency. In addition, as a result of executing final settlement agreements in its securities class action and shareholder derivative lawsuits, as of December 31, 2025, HEI recorded a settlement accrual of $47.8 million, and concurrently, recorded an insurance reimbursement receivable of an equivalent amount as the recovery of the agreed settlement payment under its directors and officers liability insurance policy is deemed probable. Refer to “Recent Developments” and Note 2 of the Consolidated Financial Statements for more information.
See Notes 1, 2 and 4 of the Consolidated Financial Statements.
Income taxes. Deferred income tax assets and liabilities are established for the temporary differences between the financial reporting bases and the tax bases of the Company’s assets and liabilities using tax rates expected to be in effect when such deferred tax assets or liabilities are realized or settled. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.
In 2024, the Company generated a $287.1 million capital loss from the sale of ASB. For federal tax purposes, any excess capital loss is first carried back three years and then carried forward for up to five years to offset future capital gains. For Hawaii state tax purposes, unused capital losses can only be carried forward for up to five years, with no carryback option available. Since capital losses can only be offset against capital gains, the Company believes it is more likely than not that the tax benefit of the capital loss on the sale of ASB will not be realized, because there is no expectation of generating capital gains and no tax strategies in place to produce capital gains before the loss expires. As of December 31, 2025, the Company’s federal and Hawaii capital loss carryforward is $273.1 million and $289.4 million, respectively, with a valuation allowance totaling $66.1 million for federal and state, related to the capital loss.
In 2024, the Company agreed to settle the Maui windstorm and wildfires tort-related legal claims on a global basis. This nonrecurring settlement will create a net operating loss (NOL) of approximately $1.878 billion, resulting in a total deferred tax asset (DTA) of $483.7 million. The Company analyzed the positive and negative evidence of each source of taxable income that will allow the DTA to be realized as enumerated in ASC 740. Other than the capital loss carryforward discussed above, the Company expects to fully utilize current DTAs that will be generated over the next 17-year period for HEI consolidated and 13-year period for Hawaiian Electric consolidated, based on estimated income projections (exclusive of future reversals of taxable temporary differences). The Company believes that the DTA generated from the nonrecurring settlement, along with historical DTAs, will be fully utilized, with the exception of the capital loss carryforward. The Company has generated consistent earnings over the past three years exclusive of the nonrecurring settlement. The Company believes that it is more likely than not that the Company will realize the benefits of its gross DTAs, other than the capital loss carryforward, including the $483.7 million DTA recognized as a result of the settlement. If estimated future income projections turn out to be lower, it should be noted that the DTA related to the NOL carryforward does not expire.
Management evaluates its potential exposures from tax positions taken that have or could be challenged by taxing authorities. These potential exposures result because taxing authorities may take positions that differ from those taken by management in the interpretation and application of statutes, regulations and rules. Management considers the possibility of alternative outcomes based upon past experience, previous actions by taxing authorities (e.g., actions taken in other jurisdictions) and advice from its tax advisors. Management believes that the Company’s provision for tax contingencies is reasonable. However, the ultimate resolution of tax treatments disputed by governmental authorities may adversely affect the Company’s current and deferred income tax amounts.
See Note 13 of the Consolidated Financial Statements.
Following is a discussion of the electric utility segment. Additional segment information is shown in Note 3 of the Consolidated Financial Statements. The discussion concerning Hawaiian Electric should be read in conjunction with its consolidated financial statements and accompanying notes.
Executive overview and strategy. The Utilities provide electricity on all the principal islands in the State of Hawaii, 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 evolving climate dynamics, 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.
Recent developments. See also “Recent developments” in HEI’s MD&A and Note 2 of the Consolidated Financial Statements, which includes disclosures relating to Maui windstorm and wildfires.
For the full year 2025, the Utilities generated net income of approximately $168.2 million compared to net loss of $1.2 billion in 2024. See “Results of operations” below for variance explanations.
For the full year 2025, kWh sales volume increased 2.5% from 2024 levels. The increase reflects warmer weather as well as the continuing economic recovery since the Maui windstorm and wildfires and increased pumping loads as Maui energy consumption increased 6.6% from 2024 to 2025.
The price of crude oil has decreased about 14.1% compared to 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 December 2025, the Consumer Price Index (CPI) increased 2.7% over the last 12 months. In Hawaii, the January 2026 Urban Hawaii (Honolulu) CPI increased 2.4% 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 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. For the 2026 calendar year, the forecasted 2026 GDPPI was 2.58% (net of the 0.22% customer dividend), measured in October 2025, and became effective in rates on January 1, 2026.
•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 $27 million, or 14% with arrears balance 1-30 days decreasing by 18% since December 31, 2024. The decrease in accounts receivable was primarily driven by receipt of government arrears. In addition, arrears balances have declined to pre-pandemic levels as the Utilities returned to pre-pandemic collection policies, except on Maui, where the moratorium on disconnections remain in place. Further at year-end, the Utilities pledged $1 million to assist customers with larger arrears balances who may be facing financial hardship, particularly on Maui, and decreased accounts receivable accordingly. 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 ratings. 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. Act 258 is expected to help support the Utilities’ financial stability to move forward, while Act 301 provides a resolution to those affected by the Maui windstorm and wildfires and provides assurance for a global settlement to move forward. 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. Among other things, Act 266 authorizes wheeling of renewable energy and requires the PUC to establish policies and procedures to implement wheeling of renewable electricity for a capacity of not more than two megawatts, as well as microgrid service tariffs, by January 1, 2027. 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. For more information on wheeling, see discussion in “Investigation on the establishment of wheeling” below.
The One Big Beautiful Act signed into law by President Trump on July 4, 2025 may impact the ability of the Utilities’ recently selected and new wind and solar projects to qualify for federal tax credits. Regulations continue to be developed, so the complete scope of potential impacts remains unknown at this time. Any loss in renewable energy tax credits could lead to project risk for new wind and solar projects in development and will likely result in higher prices for such projects, developers of which rely extensively on federal tax credits to finance such projects. It is also possible that the sunsetting of these tax credits will impact the supply chain for projects throughout the U.S. as developers rush to meet the four-year safe harbor timeline. The legislature is expected to consider legislation to provide a state tax credit to fill the void left by the expiration of the federal solar tax credit. However, due to budget shortfalls, the likelihood of its passage is limited.
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.
Re-basing. In its order issued on February 27, 2025, the PUC concluded that Utilities’ target revenues should be re-based for the next MRP (MRP2) and allowed the Utilities to file a single, consolidated application that presents their requested adjustment to target revenues. The proceeding to re-base the Utilities’ target revenues for MRP2 shall be bifurcated into two tracks, with the first track focused on reaching a decision on the Utilities’ revenue requirements prior to the commencement of MRP2 and the second track focused on making a final determination on the revenue requirement and addressing the rate design component.
On August 28, 2025, the Utilities filed a request to extend the time to file a rate case in order to allow collaboration among the PBR working group parties on an alternative rate re-basing proposal that could eliminate the need for a general rate case application and process. Confirmation was also sought that if a non-rate case re-basing proposal is explored but does not result in a proposal supported by the Utilities, they could file a rate case in the second half of 2026 utilizing a 2027 test year. Effectively, this alternative process would pick up on previous PBR working group re-basing discussions. This would also mean, however, that the Utilities would not file their rate case application in December 2025. This alternative approach could also address concern that re-basing and consideration of other PBR Framework modifications be done in a more synchronized manner. Upon review and consideration of the record and circumstances, the PUC granted Hawaiian Electric’s Letter Request on September 29, 2025, subject to certain conditions. During the fourth quarter of 2025, the Utilities continued to meet with the PBR working group to develop an alternative rate re-basing proposal.
On December 8, 2025, the Utilities, together with support from certain PBR parties, filed a request to extend the time to submit the alternative rate re-basing proposal by 30 days to February 6, 2026, with a corresponding extension to February 13, 2026, for statements from any party who opposes or does not agree with any submitted alternative proposal describing their opposition and the reasons. On December 16, 2025, the PUC granted the Utilities’ request to extend the deadline for the submission of an alternative re-basing proposal from January 7, 2026 to February 6, 2026 and affirmed (i) that any proposal submitted by this deadline must comport with the PUC’s prior guidance, (ii) if the parties are unsuccessful at developing an alternative proposal for the PUC’s review or if the PUC ultimately rejects any submitted alternative proposal, the Utilities shall resume work on their re-basing application utilizing a 2027 test year and file the re-basing application in the second half of 2026. The PUC correspondingly modified the deadline for parties to submit a statement of opposition to any alternative proposal from January 14, 2026 to February 13, 2026. See “Regulatory proceedings” in Note 4 of the Consolidated Financial Statements for additional discussions.
On January 28, 2026, the Utilities requested a final extension to file the alternative PBR re-basing proposal on May 7, 2026 to allow for additional time for the working group parties to develop PIMs and other PBR framework modifications. On February 12, 2026, the Utilities filed a written update with the PUC, which explained that the additional time requested will allow the parties to explore re-basing and consideration of other PBR Framework modifications in a more synchronized manner, streamline Phase 6 (the examination of proposal for modifications to the PBR Framework) and potentially save time and resources for both the PUC and parties. On February 24, 2026, the PUC granted in part the Utilities’ extension request, extending the deadline to submit an alternative re-basing proposal to March 6, 2026, to allow the PUC to promptly proceed with its review of the re-basing proposal. The PUC also extended the deadline for parties to submit any opposition to the alternative re-basing proposal to March 13, 2026. The PUC confirmed that it will resume Phase 6 following resolution of the alternative re-basing proposal.
Affiliate transactions. In June 2025, the Utilities submitted a request with the PUC to terminate or suspend the Affiliate Transaction Requirements (ATRs). Beginning in 2024 and continuing into 2026, HEI has embarked on a strategy to divest all of its affiliated companies other than the Utilities, intending for the Utilities to be HEI’s sole operating companies. Termination of the ATRs would allow implementation of a corporate integration, under which all HEI employees would move to Hawaiian Electric. A few officer positions would manage and operate both HEI and Hawaiian Electric (dual-hatted executives) and the HEI and Hawaiian Electric boards of directors would be composed of a single set of individuals. In September 2025, the PUC dismissed the request without prejudice. In its order, the PUC provided guidance on the topics to be addressed in any future request. On October 31, 2025 HEI and Hawaiian Electric filed a revised request with the PUC to terminate or suspend the ATRs. After responding to information requests from the Consumer Advocate, the Consumer Advocate issued its statement of position on February 4, 2026. The Consumer Advocate supported the approval of the request with the condition that before any recovery of expenses related to HEI, the Utilities should give the Consumer Advocate and the PUC advance notice of likely changes to recovery. HEI and Hawaiian Electric informed the PUC that the docket was ready for decision making on February 5, 2026.
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 performed in 2024. On January 10, 2025, the Utilities filed their 2025-2027 Wildfire Safety Strategy (WSS) with the PUC, which outlines their plans to reduce wildfire risk throughout their service territories over the next three years, and was approved by the PUC on December 31, 2025. In the near term, it is anticipated that these measures will result in disruptions to service and negatively impact Transmission and Distribution (T&D) System Average Interruption Duration Index (SAIDI) and System Average Interruption Frequency Index (SAIFI). 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 (PSPS) program, see discussion below under “Wildfire Safety Measures.”
Hawaii Island has two generators out of service for extended maintenance, one of which is expected to return to service in the second quarter of 2026. 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.”
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. These actions included wildfire risk analysis, operation procedures, including the implementation of the Public Safety Power Shutoff (PSPS) program, and grid design changes, enhanced inspection and vegetation management plans, and system hardening. In January 2025, the Utilities developed and filed with the PUC a 2025-2027 WSS, which identifies risk mitigation strategies to perform over the next three years across their service territories. The programs developed under the interim measures have been integrated into the 2025-2026 WSS. 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. On December 31, 2025, the PUC approved the Utilities’ 2025-2027 WSS (also known as Wildfire Mitigation Plan). The PUC also directed the Utilities to provide a 2026-2027 Wildfire Mitigation Plan Update, and guidance for the next Wildfire Mitigation Plan covering the 2028-2029 time period.
The PSPS program, initially developed under the Interim Wildfires Safety Measures Program, is now part of the Utilities’ operations. The PSPS program 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. Since the July 2024 implementation, the Utilities have continued to mature the PSPS program as it has gained experience executing the program along with public safety partners, communities, and residents. For example, the Utilities now have an in-house meteorologist and additional strategically placed weather stations to enhance its forecasting capability and situational awareness of localized hazardous conditions. The PSPS protocols 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 evolving climate dynamics 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.
Climate action plan. 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 One Big Beautiful Act signed into law by President Trump on July 4, 2025 may impact the ability of recently selected and new wind and solar projects to qualify for federal tax credits. Any loss in renewable energy tax credits could lead to project risk for new wind and solar projects in development and 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 2030 RPS goals. As of December 31, 2025, the Utilities estimate a reduction of carbon emissions of approximately 25%. This represented an increase in emissions compared to the 27% reduction in 2024 due to higher customer electric usage. As renewable energy replaces fossil fuel generation, carbon emissions are expected to continue to decline over time.
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, 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.
State of Hawaii laws and policies. In January 2025, the State of Hawaii issued two key policy documents and an alternative fuel study. The 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 (Alternative Fuel 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. On October 6, 2025, the Office of the Governor of the State of Hawaii and JERA Co., Inc., Japan’s largest power producer, signed a non-binding Strategic Partnering Agreement that establishes a framework for long-term collaboration to support Hawaii’s decarbonization goals and energy transition. The Strategic Partnering Agreement supports the implementation of the Hawaii State Energy Office’s Alternative Fuel Study to pursue fuel diversification, including liquified natural gas, to reduce near-term reliance on oil. The Utilities are engaged in planning activities designed to support the State’s energy policy objectives, including the transition to a more affordable, reliable, and sustainable energy system. These planning efforts evaluate a range of resource, fuel, and technology options and are informed by state energy policy guidance and stakeholder input. 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 support the State’s energy policy objectives and 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 2025, 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 2025, the Utilities achieved a 36.8% RPS accruing a reward of $1.9 million based on $10/MWh in exceedance of 35.0% RPS. In 2026, the Utilities are eligible for a reward of $10/MWh in exceedance of 36.0% 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 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 first cycle of the IGP was accepted by the PUC on March 7, 2024, and 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. 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. On January 2, 2026, the PUC opened the Second Cycle of the Integrated Grid Plan to continue to plan for future resources needed on the Utilities’ systems.
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.
In 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, which provides approximately 43 MW on Oahu.
Subsequently in 2022, the Utilities were approved to expand the EDRP program on the island of Maui and Oahu, which provides approximately 8 MW and 43 MW on Maui and Oahu, respectively. The PUC approved the cost recovery of the additional incentives for both Oahu and Maui through the Demand Side Management Surcharge.
During the time that EDRP was available, Bring Your Own Device Level 1 was launched on April 1, 2025, to succeed EDRP, which closed on July 1, 2024, on Oahu. The Bring Your Own Device Level 1 later evolved into Bring Your Own Device Plus, which began on May 15, 2025. Enrollment for the Bring Your Own Device Plus program will be available until total enrolled program capacity reaches 50 MW statewide.
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 second quarter of 2026.
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 Phase 2, 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 were expected to become operational in 2026 but have since been delayed.
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 Tariff Rule 29 became effective on March 10, 2022. The Utilities are currently still 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.
On October 31, 2025, the Utilities filed to the PUC a proposed framework for an update to the CBRE program that the Utilities have named CBRE Phase 3: Utility-Resourced Model. In the proposed framework, the Utilities address challenges with previous phases of the CBRE program with a utility-resourced model and putting a special emphasis on Low-to-Moderate Income customer participation. As of December 31, 2025, there has been no PUC decision on the Utilities’ proposed framework.
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. Due to ongoing uncertainties, the PUC subsequently cancelled the status conference on June 19, 2025. For more information on Act 266, see discussion in “Regulatory and legislative developments” above.
On August 29, 2025, the PUC issued an order reopening the docket and divided the proceeding into two tracks, Track A, focused on retail wheeling, and Track B, focused on an intragovernmental credit share program that was the subject of the prior procedural schedule in the docket. Among other matters, a new intervention period for interested parties to be admitted as a party to the docket and a new procedural schedule was established. Hawaiian Electric is required to develop a “straw proposal” under Track A, on or before November 10, 2025, for comment by the State of Hawaii Office of Consumer Advocacy, and any other stakeholders, on or before January 20, 2026. On October 16, 2025, the PUC issued an order, addressing the various motions for Participation and Intervention in the docket.
On October 22, 2025, the Utilities filed feedback on the PUC’s proposed Track B, Intragovernmental Shared Credit Program. The Utilities support the program but emphasize that careful program design is necessary to ensure technical feasibility, administrative efficiency, and fairness for all customers. The Utilities agree that the program could support the development of Renewable Energy Zones by unlocking government lands for renewable projects and enabling proactive transmission planning.
On November 10, 2025, the Utilities filed its Track A Retail Wheeling Straw Proposal. The Utilities note that it is providing a high-level proposal to help identify areas for further detailed discussion as Track A of the docket proceeds and reserves the right to amend the proposal or positions contained herein as discussions continue. The Utilities’ Straw Proposal provides an overview for the application process, a discussion of technical standards for grid interconnection and monitoring, provisions for metering and monitoring and a discussion of pricing mechanisms in the tariff structure and how to appropriately allocate wheeling costs. The Consumer Advocate and stakeholders provided comments on the Utilities’ Straw Proposal by January 20, 2026. The Utilities are to file responses to the comments of the Consumer Advocate and stakeholders on March 6, 2026.
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. The Utilities are currently exploring a collaborative non-rate case re-basing proposal under the PBR Framework as an alternative to a rate case process. See “Regulatory proceedings” in Note 4 of the Consolidated Financial Statements for a discussion of re-basing, PBR Framework and 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 (i.e., above 12.5% or below 6.5%). 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 ESM remains suspended and the earnings sharing adjustment for 2025 is zero as of December 31, 2025.
Actual and PUC-allowed returns, as of December 31, 2025, were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ratio (%) | | Rate-making Return on rate base (RORB)* | | Book ROACE** | | Rate-making ROACE*** |
Year ended December 31, 2025 | | Hawaiian Electric | | Hawaii Electric Light | | Maui Electric | | Hawaiian Electric | | Hawaii Electric Light | | Maui Electric | | Hawaiian Electric | | Hawaii Electric Light | | Maui Electric |
| Utility returns | | 7.61 | | | 6.65 | | | 4.49 | | | 19.27 | | | 9.51 | | | 3.48 | | | 9.92 | | | 8.19 | | | 4.54 | |
| PUC-allowed returns | | 7.37 | | | 7.52 | | | 7.43 | | | 9.50 | | | 9.50 | | | 9.50 | | | 9.50 | | | 9.50 | | | 9.50 | |
| Difference | | 0.24 | | | (0.87) | | | (2.94) | | | 9.77 | | | 0.01 | | | (6.02) | | | 0.42 | | | (1.31) | | | (4.96) | |
* Based on recorded operating income and average rate base, both adjusted for items not included in determining electric rates.
** Based on recorded net income divided by average common equity.
*** Based on recorded net income adjusted to remove items not included in determining electric rates, divided by rate making equity.
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 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.
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). In 2025, Maui Electric's returns are lower than allowed levels due to higher sustained maintenance and investments than what is recovered in current rates.
Results of operations.
2025 vs. 2024
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2025 | | 2024 | | Increase (decrease) | | (dollars in millions, except per barrel amounts) |
| $ | 3,071 | | $ | 3,207 | | $ | (136) | | | | | Revenues. Net decrease largely due to: |
| | | | | | $ | (132) | | | lower fuel oil prices partially offset by higher kWh generated1 |
| | | | | | (27) | | | lower purchased power energy prices, partially offset by higher kWh purchased and higher PPAC revenues2 |
| | | | | | (2) | | | lower Major Project Interim Recovery (MPIR) revenue |
| | | | | | 4 | | | higher Demand-Side Management revenue |
| | | | | | 23 | | | higher revenue from ARA |
| 947 | | 1,078 | | (131) | | | | | Fuel oil expense1. Net decrease largely due to lower fuel oil prices and better heat rate performance, partially offset by higher kWh generated |
| 678 | | 703 | | (25) | | | | | Purchased power expense1,2. Net decrease largely due to lower purchased power energy prices, along with liquidated damages due to project delays and performance deficiency, offset in part by higher kWh purchased and continued addition of Stage 1 and Stage 2 renewable projects |
| 620 | | 610 | | 10 | | | | | Operation and maintenance expense. Net increase largely due to: |
| | | | | | 10 | | | higher Maui windstorm legal and consulting costs primarily due to deferral of similar costs in 2024 |
| | | | | | 7 | | | higher incentive compensation programs |
| | | | | | 7 | | | higher IT consulting and system maintenance expenses |
| | | | | | 6 | | | higher property and general liability insurance costs |
| | | | | | 6 | | | higher wildfire mitigation program related to vegetation management and inspections |
| | | | | | 3 | | | higher pilot process and Demand Response cost |
| | | | | | (4) | | | 2024 accrual for settlement administration fees |
| | | | | | (10) | | | deferral of Wildfire Safety Strategy costs in 2025 |
| | | | | | (17) | | | the settlement of indemnification claims asserted by the State of Hawaii in 2024 3 |
| — | | | 1,875 | | | (1,875) | | | | | Wildfire tort-related claims, net. 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 |
| 546 | | 552 | | (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 |
| 280 | | (1,612) | | | 1,892 | | | | | Operating income (loss). Increase largely due to wildfire tort-related claims in 2024, higher ARA revenue, better heat rate performance, offset in part by higher operation and maintenance expenses |
| 221 | | (1,664) | | | 1,885 | | | | | Income (loss) before income taxes. Increase largely due to higher operating income, higher interest income earned, and higher AFUDC related to increased capital expenditures, offset in part by higher interest expense |
| 168 | | (1,226) | | | 1,394 | | | | | Net income (loss) for common stock. Increase due to higher income before income taxes, partially offset by loss on redemption of preferred stock. See below for effective tax rate explanation |
| 12.3 | % | | NM | | NM | | | | Return on average common equity |
| $ | 100.40 | | $ | 115.00 | | | $ | (14.60) | | | | | Average fuel oil cost per barrel |
| 8,423 | | 8,219 | | | 204 | | | | | Kilowatt-hour sales (millions)4 |
| 2,608 | | 2,518 | | | 90 | | | | | Number of full-time employees (at December 31) |
1The rate schedules of the 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 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 Consolidated Financial Statements.
4kWh sales were higher compared to the prior year. The increase in sales can be primarily attributed to warmer weather across the service territory and the recovery from the impacts from the Maui windstorm and wildfires.
NM - Not meaningful.
Hawaiian Electric’s effective tax rate (combined federal and state income tax rates) in 2025 was 22% (tax expense) compared to 26% (tax benefit) in 2024. The effective tax rate in 2025 was lower than 2024 primarily due to the substantial pre-
tax loss in 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 tax rate in 2024, partially offset by lower research and development tax credit claims in 2025.
For a discussion of 2023 results, please refer to the “Results of operations” section in Item 7, “Management Discussion and Analysis of Financial Condition and Results of Operations—Electric utility,” in the Company’s 2024 Form 10-K.
For more information of the Utilities’ incremental expenses related to the Maui windstorm and wildfires for the year ended December 31, 2025, see “Results of operations—Maui windstorm and wildfires related expenses, net” in HEI’s MD&A.
The net book value (cost less accumulated depreciation) of utility property, plant and equipment (PPE) as of December 31, 2025 amounted to $5.8 billion, of which approximately 18% related to generation PPE, 66% 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.
Developments in renewable energy efforts. The Utilities continue to procure renewable energy ambitiously. The Utilities’ renewable energy goals depend, in large part, on the success of renewable projects developed and operated by independent power producers. 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 Consolidated Financial Statements and the following:
New renewable PPAs.
•Under a request for proposal process governed by the PUC and monitored by independent observers, the Utilities issued 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 Stage 2 projects have reached commercial operations. See also “Purchase commitments” in Note 4 of the Consolidated Financial Statements. Separately, the PUC approved the Utilities’ Waena Battery Energy Storage System project under Stage 2. See “Utility projects” in Note 4 of the Consolidated Financial Statements.
A summary of the remaining four approved Stage 2 PPAs and the self-build project 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) |
PPAs | | | | | | | | | | | | | | |
| 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 | |
Self-build | | | | | | | | | | | | | | |
Maui Electric | | 1 | | | | 40 | / | 160 | | 11/30/26 | | | | |
| Total | | 5 | | 79 | | 304 | / | 1,168 | | | | | | $ | 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.
•Additionally, two Grid Services Purchase Agreements 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 Grid Services Purchase Agreements that were approved by the 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 |
See also “Commitments and Contingencies—Waena Battery Energy Storage System Project” in Note 4 of the Consolidated Financial Statements for further discussion.
Tariffed renewable resources.
•As of December 31, 2025, there were approximately 719 MW, 155 MW and 159 MW of installed distributed renewable solar energy technologies 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, Interim Smart Export, Smart Distributed Energy Resources — Export, Smart Distributed Energy Resources — Non-Export, Battery Bonus, Community-Based Renewable Energy, and Bring Your Own Device. As of December 31, 2025, an estimated 45% 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 December 31, 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 commencing February 1, 2026, which was approved by the PUC on January 14, 2026.
•On June 30, 2021, the Utilities issued an RFP for all fuels, including biodiesel, for supply commencing January 1, 2023. On December 13, 2021, the Utilities and PBT signed an agreement 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 2026.
•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 2026 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. A contract for a firm generation project on Maui was executed on September 22, 2025 and filed with the PUC for approval on September 26, 2025. On November 12, 2025, the PUC suspended the firm generation project’s docket to address the applicability of Hawaii Revised Statutes Chapter 343 (Hawaii Environmental Policy Act) to the project. In addition, two solar-plus storage projects on Oahu were executed on November 24, 2025 and December 18, 2025, and filed with the PUC for approval on November 26, 2025 and December 23, 2025, respectively. One solar-plus project on Maui was executed on December 22, 2025, and filed with the PUC for approval on December 23, 2025. Negotiations for the remaining projects are ongoing.
On March 28, 2025, the Utilities filed an application to the PUC for their self-build project - Waiau Repower Project. The project was estimated at $847 million and involves replacing six existing turbines with six fuel-flexible combustion turbines that provide 253 MW of renewable firm generation, expected to be placed in service in 2033. The Utilities request, among other things, approvals of 1) the commitment of funds for such project, and 2) recovery of project costs through the EPRM. On October 17, 2025, the Utilities filed an updated application reflecting revised costs of $1.16 billion, citing unavoidable and changed market conditions outside the Utilities' control. The Utilities are requesting a decision from the PUC by March 13, 2026.
A summary of the Stage 3 PPAs and self-build project is as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Utilities | | Number of contracts | | Total photovoltaic size (MW) | | BESS Size (MW/MWh) | | Firm Generation (MW) | | |
PPAs | | | | | | | | | | |
| Hawaiian Electric | | 4 | | 126 | | 510 | | 307 | | |
| Hawaii Electric Light | | 3 | | 86 | | 374 | | 60 | | |
| Maui Electric | | 4 | | 90 | | 240 | | 40 | | |
Self-build project | | | | | | | | | | |
Hawaiian Electric | | 1 | | — | | — | | 253 | | |
| Total | | 12 | | 302 | | 1,124 | | 660 | | |
•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 November 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. On August 14, 2025, the PUC issued a D&O extending the deadline for the Utilities to file a Reply Supplemental Statement of Position from August 18, 2025 to August 25, 2025. On August 18, 2025, the Utilities filed a request with the PUC for approval to not offer utility-owned sites to other potential bidders. On August 25, 2025, the Utilities filed its Reply Supplemental Statement of Position, completing the steps in the procedural schedule. On September 2, 2025, the PUC issued a D&O modifying the procedural schedule to September 9, 2025 to receive responses by any of the parties to the Utilities’ request filed on August 18, 2025. On September 9, 2025, the Consumer Advocate filed a response indicating it did not object to the Utilities’ request and a party to the docket filed a response requesting that the PUC consider the broader market impacts that limiting available sites would have on the available interconnection capacity and market competitiveness. On December 12, 2025, the Utilities filed its response to an additional PUC information request.
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 “Item 1. Business” and Note 4 of the Consolidated Financial Statements.
Federal grant. The Utilities continue to pursue government grants or assistance to help the Utilities create a safe, modern, resilient, flexible and dynamic electric grid in Hawaii. 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 was officially awarded. See “Utility projects” in Note 4 of the Consolidated Financial Statements for additional discussions. There is no assurance that the federal government will reimburse in a timely manner or may dispute reimbursement.
In 2025, President Trump has issued multiple executive orders that impact federal funding. The Utilities continue to monitor for any new executive orders and any changes that are passed down through the federal contracting officer for the Resilience Program.
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 became effective on 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 measures 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.
Liquidity and capital resources. As discussed in Note 2 of the 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’ 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. In addition, 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. HEI expects to make this initial payment no sooner than 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 current cash and cash equivalents balances of $501.8 million as of December 31, 2025, which includes $486.2 million at Utilities, the available capacity on Hawaiian Electric’s ABL Facility (see Note 6 of the Consolidated Financial Statements), and the additional liquidity from HEI’s at-the-market offering program provide sufficient liquidity to fund operations and satisfy their other obligations for the next 12 months following the issuances of their financial statements.
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.
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 repaid the entire draw down from August 2023 as of December 31, 2025. On September 5, 2025, HEI and Hawaiian Electric each entered into a fourth amended and restated credit agreement with a syndicate of eight financial institutions, increasing each of their committed capacities to $300 million (see Note 6 of the Consolidated Financial Statements). Longer term, the Utilities entered into an asset-based credit facility that allows borrowing up to $250 million (see Note 6 of the Consolidated Financial Statements) 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 December 31, 2025 |
(in millions) | Capacity | | Outstanding | | Undrawn |
Unsecured revolving line of credit | $ | 300 | | | $ | — | | | $ | 300 | |
ABL Facility | 240 | | | — | | | 240 | |
Borrowing from HEI - standing commitment letter | 75 | | | — | | | 75 | |
Total credit | $ | 615 | | | $ | — | | | 615 | |
| | | | | |
| | | | | |
| | | | | |
Cash and cash equivalents | | | | | 486 | |
Total available liquidity from cash and under existing facilities | | | | | $ | 1,101 | |
As of December 31, 2025, Hawaiian Electric had no commercial paper outstanding. Hawaii Electric Light and Maui Electric had no short-term borrowings from Hawaiian Electric but had long-term intercompany loans from Hawaiian Electric in the amount of $25 million and $90 million, respectively, as of December 31, 2025.
See Notes 6 and 7 of the Consolidated Financial Statements for a brief description of Hawaiian Electric’s loans.
Hawaiian Electric’s consolidated capital structure was as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| December 31 | 2025 | | 2024 |
| (dollars in millions) | | | | | | | |
| Short-term borrowings, net | $ | — | | | — | % | | $ | 49 | | | 1 | % |
| Long-term debt, net | 2,183 | | | 58 | | | 1,901 | | | 61 | |
| Preferred stock | — | | | — | | | 34 | | | 1 | |
| Common stock equity | 1,583 | | | 42 | | | 1,157 | | | 37 | |
| | $ | 3,766 | | | 100 | % | | $ | 3,141 | | | 100 | % |
As of December 31, 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 has improved, but continues to be impacted from the downgrades of their credit ratings, which result in higher credit spreads compared to investment grade credit spreads. Progress made in finalizing the litigation settlement and legislation that was passed allowing securitization of rates improved access to capital markets. On September 18, 2025, Hawaiian Electric issued $500 million in unsecured senior notes with an interest rate of 6.00% (2025 Notes). A portion of the proceeds was used to repay the outstanding balance of the Utilities’ revolving and term loan facilities and the remaining proceeds are intended to be used to 1) finance capital expenditures, 2) repay long-term debt and short-term debt used to finance or refinance capital expenditures, and 3) reimburse funds used for the payment of capital expenditures.
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 lower cost sources of capital.
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 of February 17, 2026, the Fitch, Moody’s and S&P ratings of Hawaiian Electric were 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+ | BB | Ba3 | Ba2 | * | * |
| Cumulative preferred stock (selected series) | * | * | B3 | WR2 | * | * |
| Outlook | Stable | Positive | Stable | Positive | Negative | Watch Positive |
1 As 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
2 Rating withdrawn due to preferred stock redemption in the fourth quarter of 2025.
* Not rated.
NP - Not Prime
WR - Withdrawn 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.
See “Credit and Capital Market Risk” in Item 1A. Risk Factors. The downgrades of Hawaiian Electric’s credit ratings will continue to adversely impact the Utilities’ ability to access lower cost sources of capital. In addition, the downgrades of Hawaiian Electric’s credit ratings triggered certain cash or payment requirements with the Utilities’ vendors. However, the Utilities believe additional vendor collateral or payment requirements will not have a material impact on the Utilities’ liquidity.
Asset-based lending facility credit agreement. On May 17, 2024, Hawaiian Electric, through a special-purpose subsidiary, entered into an ABL Facility credit agreement (ABL Credit Facility Agreement) with several banks, which, subject to the limitations and conditions set forth in such agreement, including approval by the PUC, allows borrowings of up to $250 million on a revolving basis using certain accounts receivable as collateral. Hawaiian Electric filed an application with the PUC for approval to (i) sell accounts receivable, and (ii) establish a long-term credit facility. The first approval would allow the ABL Credit Facility Agreement to become effective for 364 days and the second approval would extend the term of the ABL Credit Facility Agreement from 364 days to three years. The ABL Credit Facility Agreement has an initial term of 364 days, with an automatic extension to three years upon receipt of the second PUC approval, with three separate options to extend one additional year, subject to the consent of the lenders. Hawaiian Electric received the first and second approvals from the PUC for the ABL Credit Facility Agreement that allows short-term and long-term borrowings of up to $250 million on June 27, 2024 and October 11, 2024, respectively, subject to the availability of a sufficient borrowing base of eligible receivables. The ABL Facility became effective on July 24, 2024. As of December 31, 2025, total available capacity under the ABL Facility was $240 million and remains undrawn.
Credit agreement. On August 23, 2023, Hawaiian Electric fully drew down $200 million on its existing revolving credit facilities. The cash proceeds were invested in highly liquid short-term investments and will be used for general corporate purposes. The Utilities have repaid the entire draw down from August 2023 as of December 31, 2025, by making payments of $34 million in 2024 and $45 million, $78 million, and $43 million in the first, second, and third quarters of 2025, respectively. On September 24, 2025, Hawaiian Electric requested PUC approval of its fourth amended and restated revolving unsecured syndicated credit facility agreement, including approving extending its term to September 5, 2030 from September 4, 2026. See Note 6 of the Consolidated Financial Statements for additional information.
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. Pursuant to the approval, on September 18, 2025, Hawaiian Electric issued $500 million in unsecured senior notes with an interest rate of 6.00%. A portion of the proceeds was used to repay the outstanding balance of the Utilities’ revolving and term loan facilities and the remaining proceeds are intended to be used to 1) finance capital expenditures, 2) repay long-term debt and short-term debt used to finance or refinance capital expenditures, and 3) reimburse funds used for the payment of capital expenditures. The 2025 Notes will mature on October 1, 2033.
On November 3, 2025, Hawaiian Electric made long-term intercompany loans to Hawaii Electric Light and Maui Electric in the amount of $25 million and $90 million, respectively. The interest rate and term of the loans are the same as Hawaiian Electric’s 2025 Notes. The long-term intercompany loans are eliminated in the total consolidated Hawaiian Electric amounts. See summary table below for remaining authorized amounts as of December 31, 2025 for each respective utility.
| | | | | | | | | | | |
| (in millions) | Hawaiian Electric | Hawaii Electric Light | Maui Electric |
Total “up to” amounts of taxable debt authorized from 2025 through 2027 | $ | 900 | | $ | 115 | | $ | 150 | |
Less: taxable debt executed on September 18, 2025/ long-term intercompany loans | 500 | | 25 | | 90 | |
| Remaining authorized amounts | $ | 400 | | $ | 90 | | $ | 60 | |
As of December 31, 2025, the Utilities have $2.2 billion of long-term debt, of which $125 million is due or expected to be repaid within 12 months.
Equity. On October 28, 2025, the Utilities received 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. As of December 31, 2025, no common stock has been issued under this authorization.
Cash flows. The following table reflects the changes in cash flows for the year ended December 31, 2025 compared to the year ended December 31, 2024:
| | | | | | | | | | | | | | | | | |
| Years ended December 31 |
| (in thousands) | 2025 | | 2024 | | Change |
| Net cash provided by operating activities | $ | 437,086 | | | $ | 465,733 | | | $ | (28,647) | |
| Net cash used in investing activities | (333,431) | | | (317,631) | | | (15,800) | |
| Net cash provided by (used in) financing activities | 198,417 | | | (72,031) | | | 270,448 | |
Net cash provided by operating activities: The decrease in net cash provided by operating activities was primarily driven by higher cash paid for fuel oil stock due to higher volume purchased, and higher cash paid for accounts payable due to timing, partially offset by lower income taxes paid.
Net cash used in investing activities: The increase in net cash used in investing activities was primarily driven by an increase in capital expenditures related to construction activities.
Net cash provided by financing activities: The increase in net cash provided by financing activities was largely driven by higher proceeds from the issuance of long-term debt, primarily offset by the repayment of long- and short-term debt and the redemption of preferred stock.
For a discussion of 2023 operating, investing and financing activities, please refer to the “Liquidity and capital resources” section in Item 7, “Management Discussion and Analysis of Financial Condition and Results of Operations—Electric utility,” in the Company’s 2024 Form 10-K.
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 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.
The Utilities’ credit rating downgrades related to the Maui windstorm and wildfires will continue to adversely impact their ability to access lower cost sources of capital. 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 no sooner than 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 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.
Selected short-term and long-term contractual obligations and commitments. See “Selected short-term and long-term contractual obligations and commitments” in HEI’s MD&A for more information on the Utilities’ contractual obligations and commitments.
Competition. Although competition in the generation sector in Hawaii is moderated by the scarcity of generation sites, various permitting processes and lack of interconnections to other electric utilities, the PUC has promoted a more competitive electric industry environment through its decisions concerning competitive bidding and distributed generation. An increasing amount of generation is provided by IPPs and customer distributed generation.
Competitive bidding. On June 30, 2022, the PUC issued a decision that included a final Integrated Grid Planning Framework for Competitive Bidding that succeeded the original Framework for Competitive Bidding adopted on December 8, 2006. The final Integrated Grid Planning Framework for Competitive Bidding states, among other things, that: (1) a utility is required to use competitive bidding to acquire system resources unless the PUC finds bidding to be unsuitable; (2) the framework does not apply in certain situations identified in the framework; (3) waivers from competitive bidding for certain circumstances will be considered; (4) as ordered by the PUC, the PUC or the electric utility shall identify qualified candidates for an independent observer and select an independent observer from the final list of identified qualified candidates; (5) the utility may consider its own self-bid proposals in response to system resource needs identified in its RFP; and (6) for any resource to which competitive bidding does not apply (due to waiver or exemption), the utility retains its traditional obligation to offer to purchase capacity and energy from a Qualifying Facility (QF) at avoided cost upon reasonable terms and conditions approved by the PUC. In 2024, the PUC proposed certain revisions to the Integrated Grid Planning Framework for Competitive Bidding, and Hawaiian Electric provided comments and proposed additional modifications. On February 25, 2025, the PUC issued an order adopting the modifications.
Technological developments. New emerging and breakthrough technological developments may impact the Utilities’ future competitive position, results of operations, financial condition and liquidity. The Utilities continue to seek prudent opportunities to develop, test, pilot, and implement technologies that align with their technical and business plans and support WSS, clean energy and decarbonized goals, while ensuring reliability and resilience as the Utilities adapt to evolving climate dynamics. Technologies that the Utilities are evaluating include the commercial development of enhanced fault detection and advanced protection schemes that would monitor, detect, and isolate falling overhead distribution and transmission lines to reduce wildfire risks and improve public/employee safety. Other technologies include long-duration energy storage, grid-forming and black starting inverters in low inertia power systems, microgrids, distributed generation, grid modernization, and electrification of transportation. The Utilities also plan to start to use artificial intelligence and machine learning to test predictive analytics and control through edge computing to help assess the state of health of utility assets and prevent premature failure, and the diversification of generation from renewable sources.
Environmental matters. See “Electric utility—Regulation—Environmental regulation” under “Item 1. Business” and “Environmental regulation” in Note 4 of the Consolidated Financial Statements.
Commitments and contingencies. See Item 1A. Risk Factors, and Note 4 of the Consolidated Financial Statements for a discussion of important commitments and contingencies.
Off-balance sheet arrangements. See “Off-balance sheet arrangements” above in HEI Consolidated section.
Material estimates and critical accounting policies. Also see “Material estimates and critical accounting policies” above in HEI Consolidated section.
Regulatory assets and liabilities. The Utilities are regulated by the PUC. In accordance with accounting standards for regulatory operations, the Company’s and the Utilities’ financial statements reflect assets, liabilities, revenues and costs of the Utilities based on current cost-based rate-making regulations. The actions of regulators, including the PBR Framework, can affect the timing of recognition of revenues, expenses, assets and liabilities.
Regulatory liabilities represent amounts collected from customers for costs that are expected to be incurred in the future, or amounts collected in excess of costs incurred that are refundable to customers. Regulatory assets represent incurred costs that have been deferred because their recovery in future customer rates is probable. As of December 31, 2025, the consolidated regulatory liabilities and regulatory assets of the Utilities amounted to $1,444 million and $308 million, respectively, compared to $1,244 million and $281 million as of December 31, 2024, respectively. Regulatory liabilities and regulatory assets are
itemized in Note 4 of the Consolidated Financial Statements. Management continually assesses whether the regulatory assets are probable of future recovery by considering factors such as changes in the applicable regulatory environment. The Utilities record regulatory assets and liabilities when they are deemed probable of recovery from or refund to customers. Determining probability requires significant judgment by management and includes considerations of regulatory orders, proposed regulatory treatment, strength of the applications and other available evidence.
Management believes that the operations of the Utilities, including the impact of the approved PBR Framework, currently satisfy the criteria for regulatory accounting. If events or circumstances should change so that those criteria are no longer satisfied, the Utilities expect that their regulatory assets, net of regulatory liabilities, would be charged to the statement of income in the period of discontinuance, which may result in a material adverse effect on the Company’s and the Utilities’ results of operations, financial condition and liquidity.
Asset retirement obligations. The Utilities recognize AROs at present value of expected costs to retire long-lived assets from service, which is estimated using a discounted cash flow model that relies on significant estimates and assumptions about future decommissioning costs, inflationary rates, and the estimated date of decommissioning. The estimated future cash flows are discounted using a credit-adjusted risk-free rate to reflect the risk associated with decommissioning the assets. The Utilities have not recorded AROs for assets that are expected to operate indefinitely or where the Utilities cannot estimate a settlement date (or range of potential settlement dates.) As such, ARO liabilities are not recorded for certain asset retirement activities, including various Utility-owned generating facilities and certain electric transmission, distribution and telecommunication assets resulting from easements over property not owned by the Utilities.
Changes in estimated costs, timing of decommissioning or other assumptions used in the calculation could cause material revision on the recorded liabilities. As of December 31, 2025 and December 31, 2024, the Utilities’ AROs totaled $13.0 million and $12.5 million, respectively.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
HEI and Hawaiian Electric:
| | | | | |
| Index to Consolidated Financial Statements | Page |
Reports of Independent Registered Public Accounting Firms (PCAOB ID No. 34) - HEI | |
Reports of Independent Registered Public Accounting Firms (PCAOB ID No. 34) - Hawaiian Electric | |
| |
| HEI | |
Consolidated Statements of Income for the years ended December 31, 2025, 2024 and 2023 | |
Consolidated Statements of Comprehensive Income for the years ended December 31, 2025, 2024 and 2023 | |
Consolidated Balance Sheets at December 31, 2025 and 2024 | |
Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2025, 2024 and 2023 | |
Consolidated Statements of Cash Flows for the years ended December 31, 2025, 2024 and 2023 | |
| Hawaiian Electric | |
Consolidated Statements of Income for the years ended December 31, 2025, 2024 and 2023 | |
Consolidated Statements of Comprehensive Income for the years ended December 31, 2025, 2024 and 2023 | |
Consolidated Balance Sheets at December 31, 2025 and 2024 | |
Consolidated Statements of Capitalization at December 31, 2025 and 2024 | |
Consolidated Statements of Changes in Common Stock Equity for the years ended December 31, 2025, 2024 and 2023 | |
Consolidated Statements of Cash Flows for the years ended December 31, 2025, 2024 and 2023 | |
| Notes to Consolidated Financial Statements | |
| | |
Report of Independent Registered Public Accounting Firm |
To the shareholders and the Board of Directors of Hawaiian Electric Industries, Inc.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Hawaiian Electric Industries, Inc. and subsidiaries (the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, changes in shareholders' equity, and cash flows, for each of the three years in the period ended December 31, 2025, and the related notes and the schedules listed in the Index at Item 15(a)(2) (collectively referred to as the “financial statements”). We also have audited the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
Basis for Opinions
The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on these financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Electric Utility Segment — Certain Regulatory Assets and Liabilities — Refer to Notes 1 and 4 to the financial statements
Critical Audit Matter Description
Hawaiian Electric Company, Inc. (“Hawaiian Electric” or the “Utility”) is subject to rate regulation by the Hawaii Public Utility Commission (the “PUC”) and accounts for the effects of regulation under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 980, “Regulated Operations,” as management believes that the operations of the Utility satisfy the criteria for regulatory accounting. The Company’s continued accounting under ASC Topic 980 generally requires that rates are established by an independent, third-party regulator; rates are designed to recover the costs of providing service; and it is reasonable to assume that rates can be charged to, and collected from, customers.
Hawaiian Electric’s rates are subject to regulatory rate-setting processes and earnings oversight. Rates are determined and approved in regulatory proceedings based on an analysis of the Utility’s costs to provide utility service and a return on, and recovery of, Hawaiian Electric’s investment in the utility business.
We identified the impact of rate regulation as a critical audit matter due to the significant judgments made by management to support its assertions about the applicability of the specialized rules and to evaluate the likelihood of (1) recovery in future rates of certain incurred costs and (2) the refund to customers of certain amounts. Performing audit procedures related to these judgments required significant auditor judgment and specialized knowledge.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the application of specialized rules to account for rate regulation included the following, among others:
•We tested the effectiveness of management’s controls over (1) the evaluation of the application of specialized rules to account for rate regulation and (2) for certain regulatory assets and liabilities the evaluation of the likelihood of (a) the recovery in future rates of costs deferred as regulatory assets and (b) refunds to customers reported as regulatory liabilities.
•We evaluated the Company’s conclusion that it should apply the specialized rules to account for the effects of rate regulation.
•We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.
•We read relevant regulatory orders issued by the PUC for the Utility to assess the likelihood of recovery in future rates or of a future reduction in rates based on precedents of the PUC’s treatment of similar costs under similar circumstances.
•For certain regulatory assets and liabilities we evaluated whether the amounts recorded were in accordance with ASC Topic 980.
Contingencies — Tort-Related Legal Claims - Refer to Notes 1 and 2 to the financial statements
Critical Audit Matter Description
Multiple civil and class action lawsuits (collectively the “tort-related legal claims”) have been filed against the Company, its subsidiaries, and other defendants related to a number of brush fires that occurred on August 8, 2023, on the island of Maui. Most of these lawsuits allege that the defendants were responsible for, and/or negligent in failing to prevent or respond to the wildfires that led to the property destruction and loss of life. Other claims include, among other things, personal injury, wrongful death, emotional distress and inverse condemnation.
The Company reviews loss contingencies at least quarterly. When a loss is probable and reasonably estimable, a liability is recorded in the amount of the estimable loss. If it is reasonably possible that a loss may have been incurred and the effect on the
financial statements could be material, the Company discloses the nature of the loss contingency and an estimate of the possible loss or range of loss or a statement that such an estimate cannot be made within the notes to the financial statements.
We identified the evaluation of the loss contingencies related to the tort-related legal claims, and related disclosures, as a critical audit matter because auditing management’s judgments in determining the appropriate accounting and disclosures for the tort-related legal claims required significant auditor judgement.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the loss contingency involving the tort-related legal claims included the following, among others:
•We obtained an understanding, evaluated the design, and tested the operating effectiveness of internal controls over management’s evaluation of the tort-related legal claims, including controls related to the Company's assessment of the probability of loss, measurement and classification of the contingent liability, and related disclosures based on the facts and circumstances.
•We inquired of the Company’s management and internal and external legal counsel to understand the nature and status of the tort-related legal claims and the status of the settlement agreements described in Note 2 of the Consolidated Financial Statements.
•We read the settlement agreements regarding the tort-related legal claims.
•We requested written responses from internal and external counsel regarding (1) a description of the nature of the tort-related legal claims, (2) progress of the tort-related legal claims, (3) the status of the Company’s response, and (4) an evaluation of the likelihood of an unfavorable outcome and an estimate, if one can be made, of the amount of range of potential loss, and received written responses.
•We evaluated management’s measurement of the recorded loss contingency for the tort-related legal claims and the balance sheet classification of that liability in the Consolidated Balance Sheets.
•We evaluated any events subsequent to December 31, 2025, that might impact our evaluation of the tort-related claims loss contingency.
•We obtained written representations from executives of the Company.
•We read the Company’s related disclosures and evaluated them for consistency with the evidence obtained from our audit procedures.
/s/ Deloitte & Touche LLP
Honolulu, Hawaii
February 27, 2026
We have served as the Company’s auditor since 2017.
| | |
Report of Independent Registered Public Accounting Firm |
To the shareholder and the Board of Directors of Hawaiian Electric Company, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets and statements of capitalization of Hawaiian Electric Company, Inc. and subsidiaries (the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, changes in common stock equity, and cash flows, for each of the three years in the period ended December 31, 2025, and the related notes and the schedule listed in the Index at Item 15(a)(2) (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Certain Regulatory Assets and Liabilities — Refer to Notes 1 and 4 to the financial statements
Critical Audit Matter Description
The Company is subject to rate regulation by the Hawaii Public Utility Commission (the “PUC”) and accounts for the effects of regulation under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 980, “Regulated Operations,” as management believes that the operations of the Company satisfy the criteria for regulatory accounting. The Company’s continued accounting under ASC Topic 980 generally requires that rates are established by an independent, third-party regulator; rates are designed to recover the costs of providing service; and it is reasonable to assume that rates can be charged to, and collected from, customers.
The Company’s rates are subject to regulatory rate-setting processes and earnings oversight. Rates are determined and approved in regulatory proceedings based on an analysis of the Company’s costs to provide utility service and a return on, and recovery of, the Company’s investment in the utility business.
We identified the impact of rate regulation as a critical audit matter due to the significant judgments made by management to support its assertions about the applicability of the specialized rules and to evaluate the likelihood of (1) recovery in future rates
of certain incurred costs and (2) the refund to customers of certain amounts. Performing audit procedures related to these judgments required significant auditor judgment and specialized knowledge.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the application of specialized rules to account for rate regulation included the following, among others:
•We tested the effectiveness of management’s controls over (1) the evaluation of the application of specialized rules to account for rate regulation and (2) for certain regulatory assets and liabilities the evaluation of the likelihood of (a) the recovery in future rates of costs deferred as regulatory assets and (b) refunds to customers reported as regulatory liabilities.
•We evaluated the Company’s conclusion that it should apply the specialized rules to account for the effects of rate regulation.
•We evaluated the Company’s disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.
•We read relevant regulatory orders issued by the PUC for the Company to assess the likelihood of recovery in future rates or of a future reduction in rates based on precedents of the PUC’s treatment of similar costs under similar circumstances.
•For certain regulatory assets and liabilities we evaluated whether the amounts recorded were in accordance with ASC Topic 980.
Contingencies — Tort-Related Legal Claims - Refer to Notes 1 and 2 to the financial statements
Critical Audit Matter Description
Multiple civil and class action lawsuits (collectively the “tort-related legal claims”) have been filed against the Company, its subsidiaries, and other defendants related to a number of brush fires that occurred on August 8, 2023, on the island of Maui. Most of these lawsuits allege that the defendants were responsible for, and/or negligent in failing to prevent or respond to the wildfires that led to the property destruction and loss of life. Other claims include, among other things, personal injury, wrongful death, emotional distress and inverse condemnation.
The Company reviews loss contingencies at least quarterly. When a loss is probable and reasonably estimable, a liability is recorded in the amount of the estimable loss. If it is reasonably possible that a loss may have been incurred and the effect on the financial statements could be material, the Company discloses the nature of the loss contingency and an estimate of the possible loss or range of loss or a statement that such an estimate cannot be made within the notes to the financial statements.
We identified the evaluation of the loss contingencies related to the tort-related legal claims, and related disclosures, as a critical audit matter because auditing management’s judgments in determining the appropriate accounting and disclosures for the tort-related legal claims required significant auditor judgment.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the loss contingency involving the tort-related legal claims included the following, among others:
•We obtained an understanding, evaluated the design and tested the operating effectiveness of internal controls over management’s evaluation of the tort-related legal claims, including controls related to the Company's assessment of the probability of loss, measurement and classification of the contingent liability, and related disclosures based on the facts and circumstances.
•We inquired of the Company’s management and internal and external legal counsel to understand the nature and status of the tort-related legal claims and the status of the settlement agreements described in Note 2 of the Consolidated Financial Statements.
•We read the settlement agreements regarding the tort-related legal claims.
•We requested written responses from internal and external counsel regarding (1) a description of the nature of the tort-related legal claims, (2) progress of the tort-related legal claims, (3) the status of the Company’s response, and (4) an evaluation of the likelihood of an unfavorable outcome and an estimate, if one can be made, of the amount of range of potential loss, and received written responses.
•We evaluated management’s measurement of the recorded loss contingency for the tort-related legal claims and the balance sheet classification of that liability in the Consolidated Balance Sheets.
•We evaluated any events subsequent to December 31, 2025, that might impact our evaluation of the tort-related claims loss contingency.
•We obtained written representations from executives of the Company.
•We read the Company’s related disclosures and evaluated them for consistency with the evidence obtained from our audit procedures.
/s/ Deloitte & Touche LLP
Honolulu, Hawaii
February 27, 2026
We have served as the Company’s auditor since 2017.
| | |
| Consolidated Statements of Income |
Hawaiian Electric Industries, Inc. and Subsidiaries
| | | | | | | | | | | | | | | | | |
| Years ended December 31 | 2025 | | 2024 | | 2023 |
| (in thousands, except per share amounts) | | | | | |
| Revenues | | | | | |
| Electric utility | $ | 3,071,182 | | | $ | 3,206,700 | | | $ | 3,269,521 | |
| | | | | |
| Other | 15,714 | | | 13,150 | | | 17,982 | |
| Total revenues | 3,086,896 | | | 3,219,850 | | | 3,287,503 | |
| Expenses | | | | | |
Electric utility (includes $1,875 million of provision, net, for Wildfire tort-related claims recorded in 2024) (Note 2) | 2,791,396 | | | 4,818,558 | | | 2,967,363 | |
| | | | | |
Other (includes $35 million of impairment recorded in 2024) | 60,178 | | | 108,052 | | | 45,148 | |
| Total expenses | 2,851,574 | | | 4,926,610 | | | 3,012,511 | |
| Operating income (loss) | | | | | |
| Electric utility | 279,786 | | | (1,611,858) | | | 302,158 | |
| | | | | |
| Other | (44,464) | | | (94,902) | | | (27,166) | |
| Total operating income (loss) | 235,322 | | | (1,706,760) | | | 274,992 | |
| | | | | |
| Retirement defined benefits credit—other than service costs | 3,482 | | | 3,754 | | | 4,014 | |
Interest expense, net | (117,334) | | | (127,207) | | | (125,532) | |
| Allowance for borrowed funds used during construction | 5,893 | | | 5,470 | | | 5,201 | |
| Allowance for equity funds used during construction | 15,013 | | | 13,786 | | | 15,164 | |
| Interest income | 36,929 | | | 19,362 | | | 9,105 | |
Loss on sales of subsidiaries and equity-method investments and impairment loss on assets sold and held for sale | (12,376) | | | — | | | (644) | |
Income (loss) from continuing operations before income taxes | 166,929 | | | (1,791,595) | | | 182,300 | |
| Income tax expense (benefit) | 40,648 | | | (470,962) | | | 34,534 | |
Income (loss) from continuing operations | 126,281 | | | (1,320,633) | | | 147,766 | |
Dividends on and loss on redemption of preferred stock of subsidiaries | 3,161 | | | 1,890 | | | 1,890 | |
Income (loss) from continuing operations for common stock | 123,120 | | | (1,322,523) | | | 145,876 | |
Income (loss) from discontinued operations | — | | | (103,486) | | | 53,362 | |
Net income (loss) for common stock | $ | 123,120 | | | $ | (1,426,009) | | | $ | 199,238 | |
Continuing operations - Basic earnings (loss) per common share | $ | 0.71 | | | $ | (10.42) | | | $ | 1.33 | |
Discontinued operations - Basic earnings (loss) per common share | — | | | (0.81) | | | 0.49 | |
| Basic earnings (loss) per common share | $ | 0.71 | | | $ | (11.23) | | | $ | 1.82 | |
Continuing operations - Diluted earnings (loss) per common share | $ | 0.71 | | | $ | (10.42) | | | $ | 1.33 | |
Discontinued operations - Diluted earnings (loss) per common share | — | | | (0.81) | | | 0.48 | |
| Diluted earnings (loss) per common share | $ | 0.71 | | | $ | (11.23) | | | $ | 1.81 | |
| | | | | |
| Weighted-average number of common shares outstanding | 172,553 | | | 126,927 | | | 109,739 | |
| Net effect of potentially dilutive shares (share-based compensation programs) | 464 | | | — | | | 299 | |
| Weighted-average shares assuming dilution | 173,017 | | | 126,927 | | | 110,038 | |
The accompanying notes are an integral part of these consolidated financial statements.
| | |
| Consolidated Statements of Comprehensive Income |
Hawaiian Electric Industries, Inc. and Subsidiaries
| | | | | | | | | | | | | | | | | |
| Years ended December 31 | 2025 | | 2024 | | 2023 |
| (in thousands) | | | | | |
Net income (loss) for common stock | $ | 123,120 | | | $ | (1,426,009) | | | $ | 199,238 | |
| Other comprehensive income (loss), net of taxes: | | | | | |
| Net unrealized gains (losses) on available-for sale investment securities: | | | | | |
Net unrealized gains (losses) on available-for sale investment securities arising during the period, net of taxes of nil, $(4,110) and $7,536 for 2025, 2024 and 2023, respectively | — | | | (11,227) | | | 20,589 | |
Reclassification adjustment for net realized losses included in net income, net of taxes of nil, nil and $4,011 for 2025, 2024 and 2023, respectively | — | | | — | | | 10,954 | |
Amortization of unrealized holding losses on held-to-maturity securities, net of taxes of nil, $4,764 and $5,271 for 2025, 2024 and 2023, respectively | — | | | 13,012 | | | 14,398 | |
| Derivatives qualified as cash flow hedges: | | | | | |
| | | | | |
Unrealized interest rate hedging gains (losses), net of taxes of $(169), $237 and $(58) for 2025, 2024 and 2023, respectively | (489) | | | 683 | | | (167) | |
Reclassification adjustment to net income, net of taxes of $(358), $(70) and $(65) for 2025, 2024 and 2023, respectively | (1,031) | | | (201) | | | (186) | |
| Retirement benefit plans: | | | | | |
| | | | | |
Net gains arising during the period, net of taxes of $27,010, $23,015 and $3,778 for 2025, 2024 and 2023, respectively | 77,873 | | | 66,355 | | | 10,854 | |
Adjustment for amortization of prior service credit and net gains recognized during the period in net periodic benefit cost, net of taxes of $(713), $(597) and $(535) for 2025, 2024 and 2023, respectively | (2,057) | | | (1,730) | | | (1,560) | |
Reclassification adjustment for impact of D&Os of the PUC included in regulatory assets, net of taxes of $(25,811), $(22,096) and $(2,846) for 2025, 2024 and 2023, respectively | (74,419) | | | (63,708) | | | (8,204) | |
| Other comprehensive income (loss), net of taxes | (123) | | | 3,184 | | | 46,678 | |
| Comprehensive income (loss) attributable to Hawaiian Electric Industries, Inc. | $ | 122,997 | | | $ | (1,422,825) | | | $ | 245,916 | |
The accompanying notes are an integral part of these consolidated financial statements.
| | |
| Consolidated Balance Sheets |
Hawaiian Electric Industries, Inc. and Subsidiaries | | | | | | | | | | | | | | | | | | | | | | | |
| December 31 | | | 2025 | | | | 2024 |
| (in thousands) | | | | | | | |
| ASSETS | | | | | | | |
| Current assets: | | | | | | | |
| Cash and cash equivalents | | | $ | 501,778 | | | | | $ | 750,535 | |
| Restricted cash | | | 478,968 | | | | | 492,317 | |
| Accounts receivable and unbilled revenues, net | | | 491,526 | | | | | 457,171 | |
| Regulatory assets | | | 50,039 | | | | | 53,895 | |
| Other | | | 305,999 | | | | | 380,408 | |
| Assets held for sale | | | 56,266 | | | | | — | |
| Total current assets | | | 1,884,576 | | | | | 2,134,326 | |
| Noncurrent assets: | | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| Property, plant and equipment, net | | | | | | | |
| Land | $ | 54,596 | | | | | $ | 63,537 | | | |
| Plant and equipment | 8,730,645 | | | | | 8,634,124 | | | |
| Right-of-use assets - finance lease | 539,485 | | | | | 448,527 | | | |
| Construction in progress | 382,147 | | | | | 366,412 | | | |
| | 9,706,873 | | | | | 9,512,600 | | | |
| Less – accumulated depreciation | (3,518,501) | | | 6,188,372 | | | (3,378,282) | | | 6,134,318 | |
| Operating lease right-of-use assets | | | 56,604 | | | | | 66,553 | |
| Regulatory assets | | | 258,076 | | | | | 227,424 | |
| Defined benefit pension and other postretirement benefit plans asset | | | 219,211 | | | | | 107,335 | |
| Other | | | 316,040 | | | | | 261,460 | |
| Total noncurrent assets | | | 7,038,303 | | | | | 6,797,090 | |
| | | | | | | |
| | | | | | | |
| Total assets | | | $ | 8,922,879 | | | | | $ | 8,931,416 | |
(Continued)
| | |
Consolidated Balance Sheets (continued) |
Hawaiian Electric Industries, Inc. and Subsidiaries | | | | | | | | | | | | | | | | | | | | | | | |
| December 31 | | | 2025 | | | | 2024 |
| (in thousands) | | | | | | | |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | |
| Current liabilities: | | | | | | | |
| Accounts payable | | | $ | 219,062 | | | | | $ | 203,452 | |
| Interest and dividends payable | | | 31,458 | | | | | 27,203 | |
| Short-term borrowings | | | — | | | | | 48,623 | |
| Current portion of long-term debt, net | | | 124,959 | | | | | 109,171 | |
| Regulatory liabilities | | | 51,997 | | | | | 26,568 | |
| Wildfire related claims | | | 530,000 | | | | | 478,750 | |
| Other | | | 410,458 | | | | | 430,824 | |
| Liabilities held for sale | | | 59,803 | | | | | — | |
| Total current liabilities | | | 1,427,737 | | | | | 1,324,591 | |
| Noncurrent liabilities: | | | | | | | |
| Long-term debt, net | | | 2,285,016 | | | | | 2,690,387 | |
| | | | | | | |
| Operating lease liabilities | | | 43,278 | | | | | 56,523 | |
| Finance lease liabilities | | | 505,590 | | | | | 426,598 | |
| Regulatory liabilities | | | 1,392,147 | | | | | 1,217,515 | |
| Defined benefit plans liability | | | 23,656 | | | | | 23,213 | |
| Wildfire tort-related claims | | | 1,436,250 | | | | | 1,436,250 | |
| Other | | | 203,286 | | | | | 242,957 | |
| Total noncurrent liabilities | | | 5,889,223 | | | | | 6,093,443 | |
| | | | | | | |
| Total liabilities | | | 7,316,960 | | | | | 7,418,034 | |
| Preferred stock of subsidiaries - not subject to mandatory redemption | | | — | | | | | 34,293 | |
| Commitments and contingencies (Notes 2 and 4) | | | | | | | |
| Shareholders’ equity | | | | | | | |
Preferred stock, no par value, authorized 10,000,000 shares; issued: none | | | — | | | | | — | |
Common stock, no par value, authorized 400,000,000 shares; issued and outstanding: 172,620,476 shares and 172,465,608 shares at December 31, 2025 and 2024, respectively | | | 2,268,187 | | | | | 2,264,544 | |
| Retained earnings (deficit) | | | (665,606) | | | | | (788,916) | |
| Accumulated other comprehensive income, net of taxes | | | | | | | |
| | | | | | | |
| Unrealized gains on derivatives | $ | 600 | | | | | $ | 2,120 | | | |
| Retirement benefit plans | 2,738 | | | 3,338 | | | 1,341 | | | 3,461 | |
| Total shareholders’ equity | | | 1,605,919 | | | | | 1,479,089 | |
| Total liabilities and shareholders’ equity | | | $ | 8,922,879 | | | | | $ | 8,931,416 | |
The accompanying notes are an integral part of these consolidated financial statements.
| | |
| Consolidated Statements of Changes in Shareholders’ Equity |
Hawaiian Electric Industries, Inc. and Subsidiaries
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Common stock | | Retained
earnings
(deficit) | | Accumulated
other
comprehensive
income (loss) | | |
| (in thousands, except per share amounts) | Shares | | Amount | | | | Total |
| Balance, December 31, 2022 | 109,471 | | | $ | 1,692,697 | | | $ | 845,830 | | | $ | (336,028) | | | $ | 2,202,499 | |
| Net income for common stock | — | | | — | | | 199,238 | | | — | | | 199,238 | |
| Other comprehensive income, net of taxes | — | | | — | | | — | | | 46,678 | | | 46,678 | |
| Issuance of common stock: | | | | | | | | | |
| Dividend reinvestment and stock purchase plan | 537 | | | 6,612 | | | — | | | — | | | 6,612 | |
| Share-based plans | 144 | | | 6,371 | | | — | | | — | | | 6,371 | |
| Share-based expenses and other, net | — | | | 1,791 | | | — | | | — | | | 1,791 | |
Common stock dividends ($1.08 per share) | — | | | — | | | (118,348) | | | — | | | (118,348) | |
| Balance, December 31, 2023 | 110,152 | | | 1,707,471 | | | 926,720 | | | (289,350) | | | 2,344,841 | |
Net loss for common stock | — | | | — | | | (1,426,009) | | | — | | | (1,426,009) | |
| Other comprehensive income, net of taxes | — | | | — | | | — | | | 3,184 | | | 3,184 | |
| Issuance of common stock: | | | | | | | | | |
| Common stock offering | 62,162 | | | 575,000 | | | — | | | — | | | 575,000 | |
| | | | | | | | | |
| Share-based plans | 152 | | | 8,018 | | | — | | | — | | | 8,018 | |
| Common stock offering expenses | — | | | (18,621) | | | — | | | — | | | (18,621) | |
| Share-based expenses and other, net | — | | | (7,324) | | | — | | | — | | | (7,324) | |
| Discontinued operations | — | | | — | | | (289,627) | | | 289,627 | | | — | |
| | | | | | | | | |
| Balance, December 31, 2024 | 172,466 | | | 2,264,544 | | | (788,916) | | | 3,461 | | | 1,479,089 | |
Net income for common stock | — | | | — | | | 123,120 | | | — | | | 123,120 | |
Other comprehensive loss, net of tax benefits | — | | | — | | | — | | | (123) | | | (123) | |
| Issuance of common stock: | | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| Share-based plans | 154 | | | 3,896 | | | — | | | — | | | 3,896 | |
| | | | | | | | | |
| Share-based expenses and other, net | — | | | (648) | | | — | | | — | | | (648) | |
| Stock expense adjustment and other | — | | | 395 | | | 190 | | | — | | | 585 | |
| | | | | | | | | |
| Balance, December 31, 2025 | 172,620 | | | $ | 2,268,187 | | | $ | (665,606) | | | $ | 3,338 | | | $ | 1,605,919 | |
The accompanying notes are an integral part of these consolidated financial statements.
| | |
| Consolidated Statements of Cash Flows |
Hawaiian Electric Industries, Inc. and Subsidiaries
| | | | | | | | | | | | | | | | | |
| Years ended December 31 | 2025 | | 2024 | | 2023 |
| (in thousands) | | | | | |
| Cash flows from operating activities | | | | | |
| Net income (loss) | $ | 126,281 | | | $ | (1,424,119) | | | $ | 201,128 | |
Adjustments to reconcile net income (loss) to net cash provided by operating activities-continuing operations | | | | | |
| Loss (income) from discontinued operations | — | | | 103,486 | | | (53,362) | |
| Depreciation of property, plant and equipment | 260,024 | | | 261,701 | | | 254,990 | |
| Other amortization | 38,895 | | | 31,832 | | | 27,316 | |
Loss on sale of subsidiaries and equity-method investment and impairment loss on assets sold and held for sale | 12,376 | | | 39,642 | | | 644 | |
| | | | | |
Deferred income tax expense (benefit) | (10,630) | | | (486,188) | | | 9,352 | |
| Share-based compensation expense | 3,426 | | | 3,591 | | | 6,776 | |
| Allowance for equity funds used during construction | (15,013) | | | (13,786) | | | (15,164) | |
| | | | | |
| Other | (6,359) | | | (13,790) | | | (2,989) | |
| | | | | |
| Changes in assets and liabilities | | | | | |
| Decrease (increase) in accounts receivable and unbilled revenues, net | (51,351) | | | 96,700 | | | (71,643) | |
| Decrease (increase) in fuel oil stock | (15,579) | | | 49,361 | | | 43,388 | |
Increase in materials and supplies | (14,458) | | | (4,177) | | | (34,887) | |
Increase in regulatory assets | (30,462) | | | (22,743) | | | (10,613) | |
Increase in regulatory liabilities | 96,043 | | | 48,433 | | | 54,470 | |
Increase in accounts, interest and dividends payable | 7,032 | | | 6,862 | | | 34,290 | |
| Change in prepaid and accrued income taxes, tax credits and utility revenue taxes | (4,563) | | | (25,525) | | | (9,858) | |
Change in defined benefit pension and other postretirement benefit plans asset/liability | (8,788) | | | (9,358) | | | (8,215) | |
Increase in wildfire related claims | 47,750 | | | 1,840,000 | | | 75,000 | |
| Change in other assets and liabilities, net | (43,551) | | | (53,812) | | | (57,255) | |
Net cash provided by operating activities-continuing operations | 391,073 | | | 428,110 | | | 443,368 | |
Net cash provided by operating activities-discontinued operations | — | | | 59,371 | | | 108,103 | |
| Net cash provided by operating activities | 391,073 | | | 487,481 | | | 551,471 | |
| Cash flows from investing activities | | | | | |
| Capital expenditures | (341,202) | | | (344,251) | | | (442,727) | |
Proceeds from sale of subsidiaries | 13,781 | | | — | | | — | |
| | | | | |
| Other, net | 5,246 | | | 10,330 | | | 6,558 | |
Net cash used in investing activities-continuing operations | (322,175) | | | (333,921) | | | (436,169) | |
Net cash provided by investing activities-discontinued operations | — | | | 592,239 | | | 178,770 | |
Net cash provided by (used in) investing activities | $ | (322,175) | | | $ | 258,318 | | | $ | (257,399) | |
(continued)
| | |
| Consolidated Statements of Cash Flows (continued) |
Hawaiian Electric Industries, Inc. and Subsidiaries
| | | | | | | | | | | | | | | | | |
| Years ended December 31 | 2025 | | 2024 | | 2023 |
| Cash flows from financing activities | | | | | |
| Net decrease in short-term borrowings with original maturities of three months or less | $ | — | | | $ | — | | | $ | (137,650) | |
| Proceeds from issuance of short-term debt | — | | | 50,000 | | | 65,000 | |
| Repayment of short-term debt | (50,000) | | | — | | | (100,000) | |
| | | | | |
| Proceeds from issuance of long-term debt | 510,000 | | | 5,475 | | | 625,000 | |
Repayment of long-term debt and funds transferred for repayment of long-term debt | (733,564) | | | (97,698) | | | (167,080) | |
| Withheld shares for employee taxes on vested share-based compensation | (178) | | | (1,074) | | | (2,371) | |
| Net proceeds from issuance of common stock | — | | | 556,612 | | | 1,223 | |
| Common stock dividends | — | | | — | | | (73,957) | |
| Preferred stock dividends of subsidiaries | (1,890) | | | (1,890) | | | (1,890) | |
| Redemption of preferred stock of subsidiaries | (35,368) | | | — | | | — | |
| Other | (20,004) | | | (13,867) | | | (5,133) | |
Net cash provided by (used in) financing activities-continuing operations | (331,004) | | | 497,558 | | | 203,142 | |
Net cash used in financing activities-discontinued operations | — | | | (342,853) | | | (7,567) | |
Net cash provided by (used in) financing activities | (331,004) | | | 154,705 | | | 195,575 | |
Net increase (decrease) in cash, cash equivalents and restricted cash, including cash from discontinued operations | (262,106) | | | 900,504 | | | 489,647 | |
Cash, cash equivalents and restricted cash from continuing operations, January 1 | 1,242,852 | | | 259,119 | | | 48,778 | |
Cash, cash equivalents and restricted cash from discontinued operations, January 1 | — | | | 435,455 | | | 156,149 | |
Cash, cash equivalents and restricted cash, including cash from discontinued operations, December 31 | 980,746 | | | 1,595,078 | | | 694,574 | |
| Less: Cash from discontinued operations | — | | | (352,226) | | | (435,455) | |
Cash, cash equivalents and restricted cash from continuing operations, December 31 | 980,746 | | | 1,242,852 | | | 259,119 | |
| Less: Restricted cash | (478,968) | | | (492,317) | | | (15,028) | |
Cash and cash equivalents from continuing operations, December 31 | $ | 501,778 | | | $ | 750,535 | | | $ | 244,091 | |
The accompanying notes are an integral part of these consolidated financial statements.
| | |
| Consolidated Statements of Income |
Hawaiian Electric Company, Inc. and Subsidiaries
| | | | | | | | | | | | | | | | | |
| Years ended December 31 | 2025 | | 2024 | | 2023 |
| (in thousands) | | | | | |
| Revenues | $ | 3,071,182 | | | $ | 3,206,700 | | | $ | 3,269,521 | |
| Expenses | | | | | |
| Fuel oil | 947,445 | | | 1,078,045 | | | 1,211,420 | |
| Purchased power | 677,654 | | | 703,371 | | | 671,769 | |
| Other operation and maintenance | 620,442 | | | 609,672 | | | 533,557 | |
Wildfire tort-related claims (Note 2) | — | | | 1,875,000 | | | — | |
| Depreciation | 256,039 | | | 251,142 | | | 243,705 | |
| Taxes, other than income taxes | 289,816 | | | 301,328 | | | 306,912 | |
| Total expenses | 2,791,396 | | | 4,818,558 | | | 2,967,363 | |
| Operating income (loss) | 279,786 | | | (1,611,858) | | | 302,158 | |
| Allowance for equity funds used during construction | 15,013 | | | 13,786 | | | 15,164 | |
Retirement defined benefits credit—other than service costs | 4,135 | | | 4,137 | | | 4,303 | |
| Interest expense and other charges, net | (93,702) | | | (82,082) | | | (86,140) | |
| Allowance for borrowed funds used during construction | 5,893 | | | 5,470 | | | 5,201 | |
Interest income | 9,463 | | | 6,633 | | | 6,454 | |
| Income (loss) before income taxes | 220,588 | | | (1,663,914) | | | 247,140 | |
| Income tax expense (benefit) | 49,033 | | | (439,547) | | | 51,193 | |
| Net income (loss) | 171,555 | | | (1,224,367) | | | 195,947 | |
Dividends on and loss on redemption of preferred stock of subsidiaries | 915 | | | 915 | | | 915 | |
| Net income (loss) attributable to Hawaiian Electric | 170,640 | | | (1,225,282) | | | 195,032 | |
Dividends on and loss on redemption of preferred stock of Hawaiian Electric | 2,425 | | | 1,080 | | | 1,080 | |
| Net income (loss) for common stock | $ | 168,215 | | | $ | (1,226,362) | | | $ | 193,952 | |
The accompanying notes are an integral part of these consolidated financial statements.
| | |
| Consolidated Statements of Comprehensive Income |
Hawaiian Electric Company, Inc. and Subsidiaries
| | | | | | | | | | | | | | | | | |
| Years ended December 31 | 2025 | | 2024 | | 2023 |
| (in thousands) | | | | | |
| Net income (loss) for common stock | $ | 168,215 | | | $ | (1,226,362) | | | $ | 193,952 | |
Other comprehensive loss, net of taxes: | | | | | |
| Retirement benefit plans: | | | | | |
Net gains arising during the period, net of taxes of $26,518, $22,780 and $3,529 for 2025, 2024 and 2023, respectively | 76,455 | | | 65,680 | | | 10,175 | |
Adjustment for amortization of prior service credit and net gains recognized during the period in net periodic benefit cost, net of taxes of $(757), $(706) and $(688) for 2025, 2024 and 2023, respectively | (2,182) | | | (2,035) | | | (1,983) | |
Reclassification adjustment for impact of D&Os of the PUC included in regulatory assets, net of taxes of $(25,811), $(22,096), and $(2,846) for 2025, 2024 and 2023, respectively | (74,419) | | | (63,708) | | | (8,204) | |
Other comprehensive loss, net of taxes | (146) | | | (63) | | | (12) | |
| Comprehensive income (loss) attributable to Hawaiian Electric Company, Inc. | $ | 168,069 | | | $ | (1,226,425) | | | $ | 193,940 | |
The accompanying notes are an integral part of these consolidated financial statements.
| | |
| Consolidated Balance Sheets |
Hawaiian Electric Company, Inc. and Subsidiaries
| | | | | | | | | | | |
| December 31 | 2025 | | 2024 |
| (in thousands) | | | |
| Assets | | | |
| Property, plant and equipment | | | |
| Utility property, plant and equipment | | | |
| Land | $ | 52,107 | | | $ | 52,019 | |
| Plant and equipment | 8,719,617 | | | 8,421,501 | |
| Right-of-use assets - finance lease | 539,485 | | | 447,101 | |
| Less accumulated depreciation | (3,508,592) | | | (3,326,624) | |
| Construction in progress | 382,147 | | | 365,709 | |
| Utility property, plant and equipment, net | 6,184,764 | | | 5,959,706 | |
Nonutility property, plant and equipment, less accumulated depreciation of $1 and $1 as of December 31, 2025 and 2024, respectively | 2,705 | | | 2,792 | |
| Total property, plant and equipment, net | 6,187,469 | | | 5,962,498 | |
| Current assets | | | |
| Cash and cash equivalents | 486,220 | | | 184,148 | |
| Customer accounts receivable, net | 172,894 | | | 199,898 | |
| Accrued unbilled revenues, net | 192,033 | | | 178,721 | |
| Other accounts receivable, net | 76,346 | | | 69,637 | |
| Fuel oil stock, at average cost | 113,582 | | | 98,903 | |
| Materials and supplies, at average cost | 132,803 | | | 118,466 | |
| Prepayments and other | 57,980 | | | 151,220 | |
| Regulatory assets | 50,039 | | | 53,895 | |
| Total current assets | 1,281,897 | | | 1,054,888 | |
| Other long-term assets | | | |
| Operating lease right-of-use-assets | 55,863 | | | 59,281 | |
| Regulatory assets | 258,076 | | | 227,424 | |
| Defined benefit pension and other postretirement benefit plans asset | 219,477 | | | 108,819 | |
Investment in unconsolidated affiliate | 287,250 | | | — | |
| Other | 240,488 | | | 200,694 | |
| Total other long-term assets | 1,061,154 | | | 596,218 | |
| Total assets | $ | 8,530,520 | | | $ | 7,613,604 | |
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(Continued)
| | |
| Consolidated Balance Sheets (continued) |
| Hawaiian Electric Company, Inc. and Subsidiaries |
| | | | | | | | | | | |
| December 31 | 2025 | | 2024 |
| (in thousands) | | | |
| Capitalization and liabilities | | | |
Capitalization (see Consolidated Statements of Capitalization) | | | |
| Common stock equity | $ | 1,583,399 | | | $ | 1,156,955 | |
| Cumulative preferred stock – not subject to mandatory redemption | — | | | 34,293 | |
Commitments and contingencies (Notes 2 and 4) | | | |
| Long-term debt, net | 2,057,874 | | | 1,854,214 | |
| Total capitalization | 3,641,273 | | | 3,045,462 | |
| Current liabilities | | | |
| Current portion of operating lease liabilities | 17,565 | | | 15,202 | |
| Current portion of long-term debt, net | 124,959 | | | 47,000 | |
| Short-term borrowings from non-affiliate | — | | | 48,623 | |
| Accounts payable | 217,203 | | | 196,980 | |
| Interest and preferred dividends payable | 28,024 | | | 21,536 | |
| Taxes accrued, including revenue taxes | 263,179 | | | 272,001 | |
| Regulatory liabilities | 51,997 | | | 26,568 | |
Wildfire tort-related claims | 482,250 | | | 478,750 | |
| Other | 119,278 | | | 121,011 | |
| Total current liabilities | 1,304,455 | | | 1,227,671 | |
| Deferred credits and other liabilities | | | |
| Operating lease liabilities | 42,753 | | | 49,135 | |
| Finance lease liabilities | 505,590 | | | 425,625 | |
| Regulatory liabilities | 1,392,147 | | | 1,217,515 | |
| Unamortized tax credits | 67,918 | | | 76,676 | |
| Defined benefit plans liability | 6,909 | | | 6,428 | |
Wildfire tort-related claims | 1,436,250 | | | 1,436,250 | |
| Other | 133,225 | | | 128,842 | |
| Total deferred credits and other liabilities | 3,584,792 | | | 3,340,471 | |
| Total capitalization and liabilities | $ | 8,530,520 | | | $ | 7,613,604 | |
The accompanying notes are an integral part of these consolidated financial statements.
| | |
Consolidated Statements of Capitalization |
Hawaiian Electric Company, Inc. and Subsidiaries
| | | | | | | | | | | | | | |
| December 31 | | 2025 | | 2024 |
| (dollars in thousands, except par value) | | | | |
| Common stock equity | | | | |
| Common stock of $6 2/3 par value | | | | |
Authorized: 50,000,000 shares. Outstanding: 17,854,278 shares | | | | |
at December 31, 2025 and 2024 | | $ | 119,048 | | | $ | 119,048 | |
| Premium on capital stock | | 811,350 | | | 810,955 | |
| Retained earnings | | 362,301 | | | 223,896 | |
| Additional paid-in capital | | 288,060 | | | 270 | |
| Accumulated other comprehensive income, net of taxes-retirement benefit plans | | 2,640 | | | 2,786 | |
| Common stock equity | | $ | 1,583,399 | | | $ | 1,156,955 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Cumulative preferred stock not subject to mandatory redemption | | | | |
Authorized: 5,000,000 shares of $20 par value and 7,000,000 shares of $100 par value. | | | | |
| Series | | Par Value | | | | Shares outstanding December 31, 2025 | | Shares outstanding December 31, 2024 | | 2025 | | 2024 |
| (dollars in thousands, except par value and shares outstanding) | | | | |
C-4.25% | | $ | 20 | | | (Hawaiian Electric) | | — | | | 150,000 | | | $ | — | | | $ | 3,000 | |
D-5.00% | | 20 | | | (Hawaiian Electric) | | — | | | 50,000 | | | — | | | 1,000 | |
E-5.00% | | 20 | | | (Hawaiian Electric) | | — | | | 150,000 | | | — | | | 3,000 | |
H-5.25% | | 20 | | | (Hawaiian Electric) | | — | | | 250,000 | | | — | | | 5,000 | |
I-5.00% | | 20 | | | (Hawaiian Electric) | | — | | | 89,657 | | | — | | | 1,793 | |
J-4.75% | | 20 | | | (Hawaiian Electric) | | — | | | 250,000 | | | — | | | 5,000 | |
K-4.65% | | 20 | | | (Hawaiian Electric) | | — | | | 175,000 | | | — | | | 3,500 | |
G-7.625% | | 100 | | | (Hawaii Electric Light) | | — | | | 70,000 | | | — | | | 7,000 | |
H-7.625% | | 100 | | | (Maui Electric) | | — | | | 50,000 | | | — | | | 5,000 | |
| | | | | | | — | | | 1,234,657 | | | — | | | 34,293 | |
(continued)
| | |
Consolidated Statements of Capitalization (continued) |
Hawaiian Electric Company, Inc. and Subsidiaries
| | | | | | | | | | | |
| December 31 | 2025 | | 2024 |
| (in thousands) | | | |
| Long-term debt | | | |
| Obligations to the State of Hawaii for the repayment of Special Purpose Revenue Bonds (subsidiary obligations unconditionally guaranteed by Hawaiian Electric): | | | |
3.50%, Series 2019, due 2049 | $ | 80,000 | | | $ | 80,000 | |
3.20%, Refunding series 2019, due 2039 | 150,000 | | | 150,000 | |
3.10%, Refunding series 2017A, due 2026 | 125,000 | | | 125,000 | |
4.00%, Refunding series 2017B, due 2037 | 140,000 | | | 140,000 | |
3.25%, Refunding series 2015, paid in 2025 | — | | | 47,000 | |
| Total obligations to the State of Hawaii | $ | 495,000 | | | $ | 542,000 | |
| Other long-term debt – unsecured: | | | |
| Taxable senior notes: | | | |
6.00%, Series 2025, due 2033 | 500,000 | | | — | |
6.11%, Series 2023A, due 2030 | 40,000 | | | 40,000 | |
6.25%, Series 2023A and 2023B, due 2033 | 90,000 | | | 90,000 | |
6.70%, Series 2023C, due 2053 | 20,000 | | | 20,000 | |
3.70%, Series 2022A, due 2032 | 60,000 | | | 60,000 | |
3.51%, Series 2020C and 2020E, due 2050 | 70,000 | | | 70,000 | |
3.28%, Series 2020B and 2020D, due 2040 | 45,000 | | | 45,000 | |
3.96%, Series 2020A, 2020B and 2020C, due 2050 | 50,000 | | | 50,000 | |
3.31%, Series 2020A and 2020B, due 2030 | 110,000 | | | 110,000 | |
4.21%, Series 2019A, due 2034 | 50,000 | | | 50,000 | |
4.38%, Series 2018A, due 2028 | 67,500 | | | 67,500 | |
4.53%, Series 2018B, due 2033 | 17,500 | | | 17,500 | |
4.72%, Series 2018C, due 2048 | 15,000 | | | 15,000 | |
4.31%, Series 2017A, due 2047 | 50,000 | | | 50,000 | |
4.54%, Series 2016A, due 2046 | 40,000 | | | 40,000 | |
5.23%, Series 2015A, due 2045 | 80,000 | | | 80,000 | |
4.84%, Series 2013A, 2013B and 2013C, due 2027 | 100,000 | | | 100,000 | |
5.65%, Series 2013B and 2013C, due 2043 | 70,000 | | | 70,000 | |
4.72%, Series 2012D, due 2029 | 35,000 | | | 35,000 | |
5.39%, Series 2012E, due 2042 | 150,000 | | | 150,000 | |
4.53%, Series 2012F, due 2032 | 40,000 | | | 40,000 | |
| Total taxable senior notes | 1,700,000 | | | 1,200,000 | |
Revolving credit facility SOFR +2.25%, due 2026 | — | | | 166,000 | |
| Total other long-term debt – unsecured | 1,700,000 | | | 1,366,000 | |
| Total long-term debt | 2,195,000 | | | 1,908,000 | |
| Less unamortized debt issuance costs | 12,167 | | | 6,786 | |
| Less current portion long-term debt, net of unamortized debt issuance costs | 124,959 | | | 47,000 | |
| Long-term debt, net | 2,057,874 | | | 1,854,214 | |
| Total capitalization | $ | 3,641,273 | | | $ | 3,045,462 | |
The accompanying notes are an integral part of these consolidated financial statements.
| | |
Consolidated Statements of Changes in Common Stock Equity |
Hawaiian Electric Company, Inc. and Subsidiaries
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Common stock | | Premium
on
capital
stock | | Retained
earnings | | Additional paid-in capital | | Accumulated other comprehensive income | | |
| (in thousands) | Shares | | Amount | | | | | | Total |
| Balance, December 31, 2022 | 17,854 | | | $ | 119,048 | | | $ | 810,955 | | | $ | 1,411,306 | | | $ | — | | | $ | 2,861 | | | $ | 2,344,170 | |
| Net income for common stock | — | | | — | | | — | | | 193,952 | | | — | | | — | | | 193,952 | |
Other comprehensive loss, net of tax benefits | — | | | — | | | — | | | — | | | — | | | (12) | | | (12) | |
| Common stock dividends | — | | | — | | | — | | | (129,000) | | | — | | | — | | | (129,000) | |
| Balance, December 31, 2023 | 17,854 | | | 119,048 | | | 810,955 | | | 1,476,258 | | | — | | | 2,849 | | | 2,409,110 | |
Net loss for common stock | — | | | — | | | — | | | (1,226,362) | | | — | | | — | | | (1,226,362) | |
Other comprehensive loss, net of tax benefits | — | | | — | | | — | | | — | | | — | | | (63) | | | (63) | |
| Common stock dividends | — | | | — | | | — | | | (26,000) | | | — | | | — | | | (26,000) | |
Additional paid-in capital | — | | | — | | | — | | | — | | | 270 | | | — | | | 270 | |
| Balance, December 31, 2024 | 17,854 | | | 119,048 | | | 810,955 | | | 223,896 | | | 270 | | | 2,786 | | | 1,156,955 | |
Net income for common stock | — | | | — | | | — | | | 168,215 | | | — | | | — | | | 168,215 | |
Other comprehensive loss, net of tax benefits | — | | | — | | | — | | | — | | | — | | | (146) | | | (146) | |
| Common stock dividends | — | | | — | | | — | | | (30,000) | | | — | | | — | | | (30,000) | |
Stock expense adjustment and other | — | | | — | | | 395 | | | 190 | | | — | | | — | | | 585 | |
Additional paid-in capital | — | | | — | | | — | | | — | | | 287,790 | | | — | | | 287,790 | |
| Balance, December 31, 2025 | 17,854 | | | $ | 119,048 | | | $ | 811,350 | | | $ | 362,301 | | | $ | 288,060 | | | $ | 2,640 | | | $ | 1,583,399 | |
The accompanying notes are an integral part of these consolidated financial statements.
| | |
Consolidated Statements of Cash Flows |
Hawaiian Electric Company, Inc. and Subsidiaries
| | | | | | | | | | | | | | | | | |
| Years ended December 31 | 2025 | | 2024 | | 2023 |
| (in thousands) | | | | | |
| Cash flows from operating activities | | | | | |
| Net income (loss) | $ | 171,555 | | | $ | (1,224,367) | | | $ | 195,947 | |
| Adjustments to reconcile net income (loss) to net cash provided by operating activities | | | | | |
| Depreciation of property, plant and equipment | 256,039 | | | 251,142 | | | 243,705 | |
| Other amortization | 38,166 | | | 31,828 | | | 26,490 | |
Deferred income tax expense (benefit) | (6,242) | | | (481,624) | | | 1,439 | |
| State refundable credit | (12,386) | | | (11,914) | | | (11,325) | |
| Bad debt expense | 3,541 | | | 4,720 | | | 8,161 | |
| Allowance for equity funds used during construction | (15,013) | | | (13,786) | | | (15,164) | |
| Other | 2,652 | | | (6,311) | | | 460 | |
| Changes in assets and liabilities | | | | | |
Decrease (increase) in accounts receivable | 9,481 | | | 88,376 | | | (65,004) | |
Decrease (increase) in accrued unbilled revenues | (13,254) | | | 7,561 | | | (3,048) | |
| Decrease (increase) in fuel oil stock | (14,679) | | | 49,334 | | | 43,293 | |
Increase in materials and supplies | (14,337) | | | (4,033) | | | (34,865) | |
Increase in regulatory assets | (30,462) | | | (22,743) | | | (10,613) | |
Increase in regulatory liabilities | 96,043 | | | 48,433 | | | 54,470 | |
Increase in accounts payable | 8,719 | | | 9,644 | | | 20,454 | |
| Change in prepaid and accrued income taxes, tax credits and revenue taxes | (5,894) | | | (26,542) | | | 1,878 | |
Change in defined benefit pension and other postretirement benefit plans asset/liability | (8,777) | | | (9,218) | | | (8,186) | |
| Increase in wildfire tort-related claims | — | | | 1,840,000 | | | 75,000 | |
| Change in other assets and liabilities | (28,066) | | | (64,767) | | | (48,725) | |
| Net cash provided by operating activities | 437,086 | | | 465,733 | | | 474,367 | |
| Cash flows from investing activities | | | | | |
| Capital expenditures | (339,573) | | | (329,479) | | | (438,775) | |
| Other | 6,142 | | | 11,848 | | | 6,176 | |
| Net cash used in investing activities | (333,431) | | | (317,631) | | | (432,599) | |
| Cash flows from financing activities | | | | | |
| Common stock dividends | (30,000) | | | (26,000) | | | (129,000) | |
| Preferred stock dividends of Hawaiian Electric and subsidiaries | (1,995) | | | (1,995) | | | (1,995) | |
Proceeds from issuance of common stock/capital contribution from parent | 540 | | | 270 | | | — | |
| Proceeds from issuance of long-term debt | 500,000 | | | — | | | 350,000 | |
Repayment of long-term debt and funds transferred for repayment of long-term debt | (166,000) | | | (81,000) | | | (100,000) | |
Net decrease in short-term borrowings from non-affiliates and affiliate with original maturities of three months or less | — | | | — | | | (87,967) | |
| Proceeds from issuance of short-term debt | — | | | 50,000 | | | — | |
| Repayment of short-term debt | (50,000) | | | — | | | — | |
| Payments of obligations under finance leases | (9,905) | | | (4,119) | | | (3,128) | |
Redemption of preferred stock | (35,468) | | | — | | | — | |
| Other | (8,755) | | | (9,187) | | | (843) | |
| Net cash provided by (used in) financing activities | 198,417 | | | (72,031) | | | 27,067 | |
Net increase in cash, cash equivalents and restricted cash | 302,072 | | | 76,071 | | | 68,835 | |
| Cash, cash equivalents and restricted cash, January 1 | 184,148 | | | 108,077 | | | 39,242 | |
| Cash, cash equivalents and restricted cash, December 31 | 486,220 | | | 184,148 | | | 108,077 | |
| Less: Restricted cash | — | | | — | | | (2,000) | |
| Cash and cash equivalents, December 31 | $ | 486,220 | | | $ | 184,148 | | | $ | 106,077 | |
The accompanying notes are an integral part of these consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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Note 1 · Summary of significant accounting policies |
Hawaiian Electric Industries, Inc. (HEI) is a holding company with direct and indirect subsidiaries principally engaged in electric utility and non-regulated renewable/sustainable infrastructure businesses operating in the State of Hawaii. HEI owns Hawaiian Electric Company, Inc. (Hawaiian Electric), ASB Hawaii, Inc. (ASB Hawaii), GLST1, LLC (GLST1) and Pacific Current, LLC (Pacific Current).
Hawaiian Electric and its wholly owned operating subsidiaries, Hawaii Electric Light Company, Inc. (Hawaii Electric Light) and Maui Electric Company, Limited (Maui Electric), are regulated public electric utilities (collectively, the Utilities) in the business of generating, purchasing, transmitting, distributing and selling electric energy on all major islands in Hawaii other than Kauai. Hawaiian Electric also owns Renewable Hawaii, Inc. (RHI), and HE AR INTER LLC. See Note 3.
ASB Hawaii, is an intermediate holding company that previously owned American Savings Bank, F.S.B. (ASB), a federally chartered, full-service Hawaii community bank. In December 2024, ASB Hawaii sold ASB but currently retains a 9.9% noncontrolling investment in ASB. See Note 5.
GLST1 is a wholly owned subsidiary of Hawaiian Electric Industries, Inc. created for the specific purpose of holding HEI’s and Hawaiian Electric’s first liability installment payment pursuant to the settlement agreements to settle the tort-related legal claims in the litigation arising out of the Maui windstorm and wildfires. See Note 2.
Pacific Current is a wholly owned subsidiary of Hawaiian Electric Industries, Inc. created to invest in non-regulated energy and sustainable infrastructure in the State of Hawaii. Pacific Current’s last remaining subsidiary, Mahipapa, LLC (Mahipapa), operates a firm dispatchable closed-loop biomass-to-energy facility on Kauai. In March 10, 2025, Pacific Current’s Hamakua Energy, LLC (Hamakua Energy) was sold to an unaffiliated third party. In June 2025, all of Pacific Current’s membership interests in Mauo, LLC (Mauo), Kaʻieʻie Waho Company, LLC (Kaʻieʻie Waho), Upena, LLC, and Alenuihaha Developments, LLC were transferred to PC Opco. On August 1, 2025, PC Opco was sold to an unaffiliated third party. See Note 3.
Basis of presentation. In preparing the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP), 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.
Material estimates that are particularly susceptible to significant change for HEI and its subsidiaries (collectively, the Company) include the amounts reported as fair value for pension and other postretirement benefit obligations; contingencies and litigation; income taxes; regulatory assets and liabilities (Utilities only); and asset retirement obligations (Utilities only).
Consolidation. The HEI consolidated financial statements include the accounts of HEI and its subsidiaries. The Hawaiian Electric consolidated financial statements include the accounts of Hawaiian Electric and its subsidiaries. When HEI or Hawaiian Electric has a controlling financial interest in another entity (usually, majority voting interest), that entity is consolidated. Investments in companies over which the Company or the Utilities have the ability to exercise significant influence, but not control, are accounted for using the equity method. The consolidated financial statements exclude variable interest entities (VIEs) when the Company or the Utilities are not the primary beneficiaries. Significant intercompany amounts are eliminated in consolidation (see Note 3 for limited exceptions).
Sale of American Savings Bank, F.S.B. As a result of a comprehensive review of strategic options of ASB, on December 30, 2024, HEI, ASB, and ASB Hawaii, a wholly owned subsidiary of HEI and ASB’s parent holding company, entered into investment agreements to sell 90.1% of the common stock of ASB to various investors, including certain ASB officers and directors of ASB while retaining a 9.9% noncontrolling ownership position. The sale transaction closed on December 31, 2024 and no investor acquired more than 9.9% of the common stock of ASB. The sale of ASB met the accounting requirements to be disclosed as discontinued operations. Accordingly, the results of ASB, including the loss on the ASB sale, are presented as discontinued operations in the consolidated statements of income and cash flows, and have been excluded from both continuing operations and segment results for all periods presented. Unless otherwise noted, reference within the following notes to consolidated financial statements exclude discontinued operations. See Note 5.
Investment in ASB. As a result of the ASB sale transaction on December 31, 2024, the Company retained a 9.9% noncontrolling ownership interest in ASB amounting to $44.6 million as of December 31, 2025 and 2024, and is included in “Other noncurrent assets” on the Company’s Consolidated Balance Sheets. The Company has elected to subsequently measure
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
its investment in ASB at cost minus impairment, in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 321, Investments-Equity Securities. FASB ASC 321 allows an entity to measure investments in equity securities without a readily determinable fair value using a measurement alternative that measures these securities at cost minus impairment. On a quarterly basis, the Company is required to make a qualitative assessment of whether the investment is impaired. As of December 31, 2025, the Company’s investment in ASB remained unchanged as there were no events that occurred or facts that have been discovered which indicated the investment was impaired.
Cash and cash equivalents. The Company considers cash on hand, deposits in banks, money market accounts, certificates of deposit, short-term commercial paper of non-affiliates and liquid investments (with original maturities of three months or less) to be cash and cash equivalents.
Restricted cash. The Company considers cash held by trustees, related to non-recourse loans at Pacific Current subsidiaries, and cash held by GLST1, related to the first liability installment payment pursuant to the settlement agreements to settle the tort-related legal claims in the litigation arising out of the Maui windstorm and wildfires, to be restricted cash. At December 31, 2025 and 2024, total restricted cash of the Company was $479.0 million and $492.3 million, respectively, which primarily represents the $478.8 million held by GLST1. For the Utilities, there was no restricted cash at December 31, 2025 and 2024.
Property, plant and equipment. Property, plant and equipment are reported at cost. Self-constructed electric utility plant includes engineering, supervision, administrative and general costs and an allowance for the cost of funds used during the construction period. These costs are recorded in construction in progress and are transferred to utility plant when construction is completed and the facilities are either placed in service or become useful for public utility purposes. Costs for betterments that make utility plant more useful, more efficient, of greater durability or of greater capacity are also capitalized. Upon the retirement or sale of electric utility plant, generally no gain or loss is recognized. The cost of the plant retired is charged to accumulated depreciation. Amounts collected from customers for cost of removal are included in regulatory liabilities. See discussion regarding “Utility projects” in Note 4.
Depreciation. Depreciation is computed primarily using the straight-line method over the estimated lives of the assets being depreciated. Electric utility plant additions in the current year are depreciated beginning January 1 of the following year in accordance with rate-making. Electric utility plant and Pacific Current generation assets have lives ranging from 16 to 51 years for production plant, from 10 to 79 years for transmission and distribution plant, and from 5 to 50 years for general plant. The Utilities’ composite annual depreciation rate, which includes a component for cost of removal, was 3.1% in 2025 and 3.2% in 2024 and 2023.
Retirement benefits. Pension and other postretirement benefit costs are charged primarily to expense and electric utility plant (in the case of the Utilities). Funding for the Company’s qualified pension plan (Plan) is based on actuarial assumptions adopted by the Pension Investment Committee administering the Plan. The participating employers contribute amounts to pension trust for the Plan in accordance with the funding requirements of the Employee Retirement Income Security Act of 1974, as amended (ERISA), including changes promulgated by the Pension Protection Act of 2006, and considering the deductibility of contributions under the Internal Revenue Code. The Company generally funds at least the net periodic pension cost during the year, subject to ERISA minimum and Internal Revenue Code limits and targeted funded status.
Certain health care and/or life insurance benefits are provided to eligible retired employees and the employees’ beneficiaries and covered dependents. The Company generally funds the net periodic postretirement benefit costs other than pension (except for executive life) for postretirement benefits other than pension (OPEB), while maximizing the use of the most tax-advantaged funding vehicles, subject to cash flow requirements and reviews of the funded status with the consulting actuary.
Environmental expenditures. The Company and the Utilities are subject to numerous federal and state environmental statutes and regulations. In general, environmental contamination treatment costs are charged to expense. Environmental costs are capitalized if the costs extend the life, increase the capacity, or improve the safety or efficiency of property; the costs mitigate or prevent future environmental contamination; or the costs are incurred in preparing the property for sale. Environmental costs are either capitalized or charged to expense when environmental assessments and/or remedial efforts are probable and the cost can be reasonably estimated. The Utilities review their sites and measure the liability quarterly by assessing a range of reasonably likely costs of each identified site using currently available information, including existing technology, presently enacted laws and regulations, experience gained at similar sites, and the probable level of involvement and financial condition of other potentially responsible parties.
Contingencies and litigation. The Company and the Utilities are subject to proceedings (including PUC proceedings), lawsuits and other claims. Management assesses the likelihood of any adverse judgments in or outcomes of these matters as well as potential ranges of probable losses. A determination of the amount of reserves required, if any, for these contingencies
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
is based on an analysis of each individual case or proceeding often with the assistance of outside counsel. Loss contingencies are reviewed quarterly and estimates are adjusted to reflect the impact of all known information, such as new developments in each matter or changes in approach in dealing with these matters, including changes in settlement strategy. When a loss is probable and reasonably estimable, a liability is recorded in the amount of the estimable loss. If it is reasonably possible that a loss may have been incurred and the effect on the financial statements could be material, the Company and the Utilities disclose the nature of the loss contingency and an estimate of the possible loss or range of loss or a statement that such an estimate cannot be made within the notes to the financial statements.
Income taxes. Deferred income tax assets and liabilities are established for the temporary differences between the financial reporting bases and the tax bases of the Company’s and the Utilities’ assets and liabilities at federal and state tax rates expected to be in effect when such deferred tax assets or liabilities are realized or settled. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Valuation allowances are established when necessary to reduce deferred income tax assets to the amount expected to be realized.
HEI and the Utilities’ investment tax credits are deferred and amortized over the estimated useful lives of the properties to which the credits relate (and for the Utilities, this treatment is in accordance with Accounting Standards Codification (ASC) Topic 980, “Regulated Operations”).
The Utilities are included in the consolidated income tax returns of HEI. However, income tax expense has been computed for financial statement purposes as if each utility filed a separate income tax return and Hawaiian Electric filed a consolidated Hawaiian Electric income tax return.
Governmental tax authorities could challenge a tax return position taken by the Company. The Company and the Utilities use a “more-likely-than-not” recognition threshold and measurement standard for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.
Fair value measurements. Fair value estimates are estimates of the price that would be received to sell an asset, or paid upon the transfer of a liability, in an orderly transaction between market participants at the measurement date. The fair value estimates are generally determined based on assumptions that market participants would use in pricing the asset or liability and are based on market data obtained from independent sources. However, in certain cases, the Company and the Utilities use their own assumptions about market participant assumptions based on the best information available in the circumstances. These valuations are estimates at a specific point in time, based on relevant market information, information about the financial instrument and judgments regarding future expected loss experience, economic conditions, risk characteristics of various financial instruments and other factors. These estimates do not reflect any premium or discount that could result if the Company or the Utilities were to sell its entire holdings of a particular financial instrument at one time. Because no active trading market exists for a portion of the Company’s and the Utilities’ financial instruments, fair value estimates cannot be determined with precision. Changes in the underlying assumptions used, including discount rates and estimates of future cash flows, could significantly affect the estimates. In addition, the tax ramifications related to the realization of the unrealized gains and losses could have a significant effect on fair value estimates, but have not been considered in making such estimates.
The Company and the Utilities group their financial assets measured at fair value in three levels outlined as follows:
Level 1: Inputs to the valuation methodology are quoted prices, unadjusted, for identical assets or liabilities in active markets. A quoted price in an active market provides the most reliable evidence of fair value and is used to measure fair value whenever available.
Level 2: Inputs to the valuation methodology include quoted prices for similar assets or liabilities in active markets; inputs to the valuation methodology include quoted prices for identical or similar assets or liabilities in markets that are not active; or inputs to the valuation methodology that are derived principally from or can be corroborated by observable market data by correlation or other means.
Level 3: Inputs to the valuation methodology are unobservable and significant to the fair value measurement. Level 3 assets and liabilities include financial instruments whose value is determined using discounted cash flow methodologies, as well as instruments for which the determination of fair value requires significant management judgment or estimation.
Classification in the hierarchy is based upon the lowest level input that is significant to the fair value measurement of the asset or liability. For instruments classified in Level 1 and 2 where inputs are primarily based upon observable market data, there is less judgment applied in arriving at the fair value. For instruments classified in Level 3, management judgment is more significant due to the lack of observable market data.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The Company reviews and updates the fair value hierarchy classifications on a quarterly basis. Changes from one quarter to the next related to the observability of inputs in fair value measurements may result in a reclassification between the fair value hierarchy levels and are recognized based on period-end balances.
Fair value is also used on a nonrecurring basis to evaluate certain assets for impairment or for disclosure purposes. Examples of nonrecurring uses of fair value include asset retirement obligations (AROs).
Earnings per share (HEI only). Basic earnings per share (EPS) and Basic EPS from continuing operations are computed by dividing net income for common stock and income from continuing operations for common stock, respectively, by the weighted-average number of common shares outstanding for the period. Diluted EPS and diluted EPS from continuing operations are computed similarly, except that dilutive common shares for stock compensation is added to the denominator. Since there is a net loss, there can be no potentially dilutive shares during the year ended December 31, 2024. As of December 31, 2025 and 2023, the antidilutive effect of restricted stock units (RSUs) on 22,172 and 65,078, respectively, shares of common stock, was not included in the computation of diluted EPS.
Impairment of long-lived assets and long-lived assets to be disposed of. The Company and the Utilities review long-lived assets and certain identifiable intangibles for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. When the Utilities conclude that recovery of the remaining carrying amount of long-lived generation asset upon retirement is probable of recovery in future rates the carrying amount of the long-lived generation asset is recorded as a regulatory asset. Other assets to be disposed of are reported at the lower of the carrying amount or fair value, less costs to sell.
Assets held for sale and discontinued operations. In June 2025, the Company determined the net assets of our remaining Pacific Current operating subsidiaries met the criteria for classification as held for sale. The Company sold Pacific Current’s solar and Battery Energy Storage System facilities in August 2025. The assets and liabilities of Pacific Current’s remaining biomass facility has been reclassified as “Assets held for sale” and “Liabilities held for sale,” respectively, in the Consolidated Balance Sheets as of December 31, 2025. The Company determined that the sale of these assets and the planned sale of the remaining asset did not represent a strategic shift having a major effect on the Company’s operations and financial results, and therefore did not meet the criteria for classification as discontinued operations. For further discussion, see “Sale of solar and Battery Energy Storage System (BESS) facilities” and “Assets held for sale-Mahipapa” in Note 3.
Recent accounting pronouncements.
Income taxes. In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvement to Income Tax Disclosures to enhance the transparency and decision usefulness of income tax disclosures. The amendments are effective for annual periods beginning after December 15, 2024. These amendments apply on a prospective basis with a retrospective option. Early adoption is permitted. The Company has adopted this amendment on a prospective basis effective for the year ended December 31, 2025. The adoption did not have a material impact on its consolidated financial statements.
Climate-related disclosures. In March 2024, the SEC issued final climate-related disclosure rules under SEC Release No. 33-11275, The Enhancement and Standardization of Climate-Related Disclosures for Investors (climate disclosure rules). If implemented, the rules would require annual disclosure of material greenhouse gas emissions; governance, risk management and strategy related to material climate-related risks; financial statement impacts of severe weather events and other natural conditions; a roll forward of carbon offset and renewable energy credit balances if material to the Company’s plan to achieve climate-related targets or goals; and material impacts on estimates and assumptions in the financial statements. In April 2024, the SEC voluntarily stayed implementation of its climate disclosure rules pending completion of judicial review by the Court of Appeals for the Eighth Circuit. In March 2025, the SEC voted to end its defense of its new rules requiring disclosure of climate-related risks and greenhouse gas emissions. The Company is monitoring further SEC developments and final rulings with respect to the applicability of this final rule.
Income statement disclosures. In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40). The guidance requires more detailed information about specified categories of expenses included in certain captions presented on the face of the income statement. ASU No. 2024-03 is effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of this amendment on the Company’s consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Internal-use software disclosures. In September 2025, the FASB issued ASU No. 2025-06, Intangibles—Goodwill and Other—Internal-Use Software: Targeted Improvements to the Accounting for Internal-Use Software. The guidance removes all references to project stages in software development and requires capitalization of internal-use software costs to begin when management has authorized and committed to funding the project and it is probable the project will be completed and used to perform the intended function. ASU No. 2025-06 is effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the impact of this amendment on the Company’s consolidated financial statements.
Accounting for government grants. In December 2025, the FASB issued ASU No. 2025-10, Accounting for Government Grants Received by Business Entities. The ASU adds guidance on the recognition, measurement and presentation of government grants received by business entities. ASU No. 2025-10 is effective for annual reporting periods beginning after December 15, 2028, and for interim reporting periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the impact of this amendment on the Company’s consolidated financial statements.
Regulation by the Public Utilities Commission of the State of Hawaii (PUC). The Utilities are regulated by the PUC and account for the effects of regulation under FASB ASC Topic 980, “Regulated Operations.” As a result, the Utilities’ financial statements reflect assets, liabilities, revenues and expenses based on current cost-based rate-making regulations (see Note 4—“Regulatory assets and liabilities”). Their continued accounting under ASC Topic 980 generally requires that rates are established by an independent, third-party regulator; rates are designed to recover the costs of providing service; and it is reasonable to assume that rates can be charged to, and collected from, customers. Management believes that the operations of the Utilities, including the impact of the approved PBR Framework, currently satisfy the criteria under ASC Topic 980.
The rate schedules of the Utilities include energy costs recovery clauses (ECRCs) under which electric rates are adjusted for changes in the weighted-average price paid for fuel oil and certain components of purchased power, and the relative amounts of company-generated power and purchased power. The rate schedules also include purchased power adjustment clauses (PPACs) under which the remaining purchase power expenses are recovered through surcharge mechanisms. The amounts collected through the ECRCs and PPACs are required to be reconciled quarterly.
Accounts receivable. Accounts receivable are recorded at the invoiced amount. The Utilities generally assess a late payment charge on balances unpaid from the previous month. The allowance for doubtful accounts is the Utilities’ best estimate of the amount of expected credit losses in the Utilities’ existing accounts receivable. At December 31, 2025 and 2024, the allowance for customer accounts receivable, accrued unbilled revenues and other accounts receivable was $6.8 million and $5.6 million, respectively.
Electric utility revenues. Revenues related to electric service are generally recorded when service is rendered and include revenues applicable to energy consumed in the accounting period but not yet billed to the customers. The Utilities also record revenue under a decoupling mechanism. See “Decoupling” discussion in Note 4.
Repairs and maintenance costs. Repairs and maintenance costs for overhauls of generating units are generally expensed as they are incurred.
Allowance for funds used during construction (AFUDC). AFUDC represents the estimated costs of debt (i.e., interest) and equity funds used to finance plant construction. AFUDC is credited on the statement of income and charged to construction in progress on the balance sheet. If a project under construction is delayed for an extended period of time, AFUDC on the delayed project may be stopped after assessing the causes of the delay and probability of recovery. The tax gross up of the allowance for equity funds used during construction is credited to income taxes on the statement of income and charged to a regulatory asset. This gross up, net of amortization of the regulatory asset, is reflected in income tax expense.
The weighted-average AFUDC rate was 7.3% in 2025 and 2024 and 7.2% in 2023, and reflected quarterly compounding.
Asset retirement obligations. AROs are accounted for in accordance with ASC 410-20, “Asset Retirement Obligations.” AROs are recognized at present value of expected costs to retire long-lived assets from service, provided a legal obligation exists and a reasonable estimate of the fair value and the settlement date can be made. In the subsequent period, the liability is accreted to its future value while the asset retirement cost is depreciated over the estimated useful life of the underlying asset. The Utilities’ recognition of AROs have no impact on earnings, as the cost of the AROs are recovered over the life of the asset through depreciation. AROs recognized by the Utilities relate to legal obligations with the retirement of plant and equipment, including removal of asbestos and other hazardous materials. See “Asset retirement obligations” in Note 4.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
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Note 2 · Maui windstorm and wildfires |
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.
Restoration costs and recoveries. The Utilities are continuing restoration work to rebuild portions of the electric system in Lahaina to ensure safe and reliable power to customers. Restoration efforts include the rebuilding of electrical lines along former routes in the Lahaina area with the installation of new interim steel and wood poles and electrical equipment. Ongoing work is focused on reestablishing electrical service to homes as they are being built.
The Public Utilities Commission of the State of Hawaii (PUC) has issued orders authorizing deferred accounting treatment for certain incremental non-labor expenses related to the Maui windstorm and wildfires incurred from August 8, 2023 through December 31, 2025. The approval pertains only to deferred cost treatment for expenses that are not already part of base rates; any actual recovery of deferred costs will be the subject of a separate application(s). As of December 31, 2025, the Utilities have deferred $80.5 million of these incremental costs to a regulatory asset.
The Utilities are actively seeking recovery of damage to rebuild the covered electrical infrastructure from their insurers and have received insurance recoveries of $8.6 million and $1.0 million for 2025 and 2024, respectively; however, the timing and amount of any future insurance recoveries remain indeterminable at this time and as such, any additional insurance receivable has not been recorded. As of December 31, 2025, the Utilities have $489.6 million of property insurance coverage remaining, net of insurance recoveries to HEI’s discontinued subsidiary.
Tort-related legal claims. HEI and the Utilities have each been named in several thousand lawsuits related to the Maui windstorm and wildfires. Nearly all of these civil lawsuits, including one putative class action, are pending in the Maui Circuit Court. Two putative class actions and one individual action are pending in federal court. These state and federal lawsuits (collectively, tort-related legal claims) name as defendants HEI, the Utilities, and others, including the County of Maui, the State of Hawaii and related state entities, private landowners and developers, and telecommunications companies. Most of these lawsuits allege that the defendants were responsible for, and/or negligent in failing to prevent or respond to the wildfires that led to property destruction and loss of life. The plaintiffs seek to recover damages and other costs, including punitive damages for, among other things, personal injury, wrongful death, emotional distress, property damage, and inverse condemnation. One lawsuit asserting similar theories and claims was filed by the County of Maui against HEI and the Utilities. A separate lawsuit was filed by Spectrum Oceanic, LLC against HEI and the Utilities and other defendants, and other lawsuits were filed by approximately 200 subrogation insurers against HEI, the Utilities, a private landowner, and telecommunications companies. Defendants have asserted cross-claims against one another for indemnification, contribution, and subrogation. Additional lawsuits may be filed against the Company and other defendants in the future.
The County of Maui Origin and Cause Report, released on October 2, 2024, attaching the investigative report by the Bureau of Alcohol, Tobacco, Firearms and Explosives, estimated the total economic damage resulting from the Maui windstorm and wildfires of approximately $6 billion. That estimate has not been validated by the Company, and it represents a gross number that does not take into account causation or liability and does not attempt to allocate responsibility among the various defendants. As such, the estimate is not intended to provide a reasonably possible loss in excess of the recorded amount under ASC Topic 450-20, “Loss Contingencies” attributable to the Company arising from the Maui windstorm and wildfires.
One ‘Ohana Initiative. The One ‘Ohana Initiative is a $175 million humanitarian aid fund with the objective to compensate, in an expedited manner and as an alternative to litigation, those who lost loved ones and those who suffered severe injuries in the Maui windstorm and wildfires. The One ‘Ohana Initiative was funded with contributions from the State of Hawaii, the County of Maui, Kamehameha Schools, Hawaiian Electric, and other parties. Hawaiian Electric’s contribution of $75 million was fully funded by its insurance carriers, and no additional outlay is required.
Class Settlement Agreement and Individual Settlement Agreement. 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, subject to certain conditions (including those described below), HEI and Hawaiian Electric, along with other defendants (the State of Hawaii, the County of Maui, Kamehameha Schools, entities affiliated with the West Maui Land Co., Hawaiian Telcom, and Spectrum/Charter Communications) have agreed to settle the claims of those who filed lawsuits in state and federal courts, or who may have claims but have not yet filed lawsuits, in connection with the Maui windstorm and wildfires. One Settlement Agreement is between the defendants, class counsel, and class plaintiffs (the Class Settlement Agreement), and the other is between the
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
defendants and over 30 lawyers representing thousands of individual plaintiffs who have brought their own lawsuits or who have hired attorneys but not yet filed lawsuits (the Individual Settlement Agreement). The Settlement Agreements do not resolve claims with insurers who have asserted or could assert subrogation claims in separate lawsuits and such insurers are not parties to the Settlement Agreements, but resolving such claims in the manner set forth in the Settlement Agreements (summarized below) is a condition that must be satisfied before any payment is due from the defendants.
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 the $75 million previously contributed to the One ‘Ohana Initiative. 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. HEI and Hawaiian Electric must pay such remaining amounts in four equal annual installments of approximately $479 million, with the first installment expected to be made once the conditions to funding are satisfied, which will occur no sooner than early 2026. HEI and Hawaiian Electric have the option to accelerate the payments, in whole or in part, with such accelerated payments to be discounted at a rate of 5.5% per annum. 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. 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 December 31, 2025 based on the best estimate at that time.
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’ Consolidated Balance Sheets as of December 31, 2025. 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’ Consolidated Balance Sheets, respectively, as of December 31, 2025, based on the amounts expected to be remaining under the applicable insurance policies at the time of settlement payment.
The Settlement Agreements are intended to resolve all of the pending and potential tort-related legal claims related to the Maui windstorm and wildfires. The Class Settlement Agreement provides releases by class plaintiffs to the defendants, and among defendants, for acts and omissions relating to the Maui windstorm and wildfires. The Individual Settlement Agreement requires individual plaintiffs who elect to accept the settlement to sign individual releases. The releases in the Settlement Agreements, including those among defendants (subject to certain conditions), are effective on the initial payment due date, which will occur after a defined set of conditions are met. The Settlement Agreements also provide that $500 million of the total settlement payments will be reserved and made available to defendants to defray the cost to resolve any claims brought by plaintiffs who do not release claims as part of either Settlement Agreement. Defendants had the right to terminate the Settlement Agreements under certain circumstances, including if more than specified thresholds of plaintiffs choose not to participate in the settlement, although that threshold-based termination right has now expired without any defendant exercising it. Defendants retain the right to terminate the Settlement Agreements if the remaining conditions to payment are not met by March 2027.
The Settlement Agreements contain multiple conditions that must be met before the initial payment due date in order for any payment from HEI and Hawaiian Electric to the settlement funds to become due. Several of those conditions, including court approval of the Individual Settlement Agreement and the appropriation of funds by the Hawaii state legislature, have been met. The remaining unsatisfied conditions as of February 24, 2026, were that (i) the claims of the insurers must be resolved (either through agreement or a final and unappealable court order dismissing their direct subrogation actions against the defendants), and (ii) the final approval of the Class Settlement Agreement must become final and unappealable.
Insurer litigation. Two primary subrogation actions have been brought by various insurers covering almost all of the direct subrogation claims. On December 30, 2025, the court in both actions entered judgment in favor of the defendants, but certain of the plaintiff insurers have now appealed those rulings. No briefing schedules in these appeals have been set.
Approval of the Class Settlement Agreement. Following a hearing on December 17, 2025, at which the court orally granted final approval of the Class Settlement Agreement and no class member objected, the Maui Circuit Court entered a written order granting such final approval on January 26, 2026. The deadline to file appeals from that order was February 25, 2026, and as of February 26, 2026, no appeal appeared on the docket. As it appears no party appealed the final approval of the Class Settlement Agreement, it appears that such final approval order is now final and unappealable.
On February 10, 2026, the Hawaii Supreme Court affirmed the denial of the subrogation insurers’ motion to intervene into the class action in order to object to the final approval of the Class Settlement Agreement.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Litigation with Opt Outs. As of December 31, 2025, some individual plaintiffs who had initially “opted out” of the Class Settlement Agreement have not signed individual agreements and releases to join the global settlement. The defendants are continuing in their efforts to resolve these claims through the $500 million holdback fund that is part of the global settlement.
The Company intends to vigorously defend itself in the litigation if a definitive settlement of all open litigation is ultimately not achieved. There is no assurance that the Company will be successful in the defense of the litigation. If additional liabilities were to be incurred, the loss could be material to the Company’s results of operations, financial position and cash flows and could result in violations of the financial covenants in the Company’s debt agreements. If any such losses were to be sufficiently high, the Company may not have liquidity or the ability to access liquidity at levels necessary to satisfy such losses. However, any possible loss in excess of the amount recorded cannot reasonably be estimated at this time.
Securities class action. On August 24, 2023, a putative securities class action was filed in the United States District Court for the Northern District of California claiming violations of the Securities Exchange Act of 1934 (the Exchange Act) and Rule 10b-5 promulgated thereunder against HEI and Hawaiian Electric and certain of HEI’s and Hawaiian Electric’s current and former officers, and Section 20(a) of the Exchange Act against certain current and former officers (the Securities Action). The lawsuit broadly alleged that the defendants made materially false and misleading statements or omissions regarding our wildfire prevention and safety protocols and related matters.
On November 5, 2025, the parties signed a binding term sheet to settle the Securities Action (the Securities Action Term Sheet) following negotiations facilitated by a mediator. On January 5, 2026, the parties executed a definitive stipulation of settlement (the Securities Action Stipulation of Settlement) that will provide for the complete resolution of the Securities Action in exchange for a payment by the Company of $47.8 million as part of the overall settlement described below. The settlement of the Securities Action is conditioned on, among other things, approval by the boards of the Company and Hawaiian Electric; the finalization and court approval of the Securities Actions stipulation of settlement; the finalization by February 26, 2026 and subsequent court approval of the stipulation of settlement in the Derivative Actions (defined and discussed below); and entry of a judgment of dismissal following final court approval. In connection with the settlement of the Securities Action, there will be no admission of liability by the Company or any defendants and the Company, the defendants, and related persons will receive a customary full release of all claims. On February 26, 2026, the United States District Court for the Northern District of California held a hearing to determine whether to preliminarily approve the Securities Action Stipulation of Settlement. Following the hearing, the court indicated that it will issue an order and set a hearing date for the final approval of the settlement.
In connection with the execution of the Securities Action Term Sheet, HEI accrued, as of December 31, 2025, $47.8 million, and concurrently recorded an insurance reimbursement receivable of an equivalent amount as the recovery of the agreed settlement payment under its directors and officers liability insurance policy is deemed probable. HEI charged the accrued settlement to “Expenses-Other” in HEI and Subsidiaries’ Consolidated Statements of Income, which was offset by the probable insurance recovery. The accrued settlement and insurance receivable is included in “Wildfire related claims” and “Accounts receivable and unbilled revenues, net,” under current liabilities and current assets, respectively, in HEI and subsidiaries’ Consolidated Balance Sheets.
Shareholder derivative lawsuits. Two putative shareholder derivative actions were filed in the Circuit Court of the First Circuit, State of Hawaii on September 11, 2023 and on November 6, 2024. In addition, three putative shareholder derivative actions were filed in the United States District Court for the Northern District of California between December 26, 2023 and February 8, 2024, and two putative shareholder derivative actions were filed in the United States District Court for the District of Hawaii between April 8, 2024 and June 8, 2024. All of the lawsuits were purportedly brought by shareholders on behalf of nominal defendants HEI and Hawaiian Electric against certain current and former officers and directors of HEI and Hawaiian Electric. In all of the cases, the plaintiffs generally alleged state law breaches of fiduciary duty, abuse of control, corporate waste, unjust enrichment, gross mismanagement and aiding and abetting breaches of fiduciary duty claims in connection with the Maui windstorm and wildfires and certain of the Company’s prior public disclosures, and some of them added claims based on purported violations of federal securities laws. Depending on the case, the plaintiffs were seeking, on behalf of HEI, damages, restitution, disgorgement, injunctive relief, and equitable relief, including in the form of changes to HEI’s corporate governance policies and procedures.
On November 5, 2025, the parties signed a binding term sheet (the Derivative Litigation Term Sheet) to settle all of the outstanding derivative actions described above (the Derivative Actions). The Derivative Litigation Term Sheet was signed following negotiations facilitated by a mediator. On December 31, 2025, the parties executed a definitive settlement agreement (the Derivative Litigation Settlement Agreement) that provides for a complete resolution of the claims asserted in the Derivative Actions in exchange for a payment on behalf of the individual defendants by the Company’s insurers in the amount of $100 million, which will be used in part to pay the $47.8 million for the Securities Action Stipulation of Settlement and fees and expenses for plaintiffs' counsel. The settlement of the Derivative Actions is conditioned on, among other things, the
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
approval by the boards of HEI and Hawaiian Electric (including their independent directors) of the Derivative Litigation Settlement Agreement; final court approval of the Derivative Litigation Settlement Agreement; and entry of final judgment and orders of dismissal in the Derivative Actions. The plaintiffs’ counsel intends to request court approval for attorneys’ fees of 25% of the settlement proceeds, plus expenses not to exceed $475,000. In connection with the settlement of the Derivative Actions, there will be no admissions of liability, and the defendants and related persons will receive a customary full release of all claims. The Securities Action Stipulation of Settlement and Derivative Litigation Settlement Agreement were promptly submitted to the courts for preliminary approval subsequent to execution. The United States District Court for the District of Hawaii is scheduled to hold a hearing to consider preliminary approval of the Derivative Litigation Settlement Agreement on March 9, 2026.
The Derivative Litigation Settlement Agreement calls for the settlement to be fully funded by the Company’s directors and officers liability insurance policies. As noted above, $47.8 million of the $100 million total will be used to fund the settlement of the Securities Action. The remaining amount, any award in the Derivative Actions for the plaintiffs’ attorneys’ fees and expenses, and payment of other settlement-related expenses provided for in the term sheet, is accounted for as a contingent gain which will be recognized when realized or realizable.
Maui windstorm and wildfires costs. Legal costs in connection with the litigation and loss contingencies are expensed as incurred. The Company has $165 million of excess liability insurance and $25 million of professional liability insurance for third party claims, including claims related to wildfires, with a retention of $0.3 million and $1.0 million, respectively, and $145 million directors and officers liability insurance to cover claims related to the shareholder and derivative lawsuits, with a retention of $1.0 million. As of December 31, 2025, the Company’s and Utilities’ insurance receivable totaled $96 million and $47 million, respectively, under the policies. As of December 31, 2025, HEI and its subsidiaries have approximately $10 million, nil and $71 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 Initiative contribution), and amounts expected to be recovered for incurred costs and recognized as a receivable as of year-end.
See table below for the incremental expenses related to the Maui windstorm and wildfires. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Year ended December 31, 2025 | | Year ended December 31, 2024 | | Year ended December 31, 2023 |
| (in thousands) | | Electric utility | | HEI Consolidated | | Electric utility | | HEI Consolidated1 | | Electric utility | | HEI Consolidated1 |
| Maui windstorm and wildfires related expenses: | | | | | | | | | | | | |
| Legal expenses | | $ | 15,685 | | | $ | 24,383 | | | $ | 51,406 | | | $ | 69,779 | | | $ | 24,737 | | | $ | 33,969 | |
Wildfire tort-related claims | | — | | | — | | | 1,915,000 | | | 1,915,000 | | | 75,000 | | | 75,000 | |
| Wildfire securities-related claims | | — | | | 47,750 | | | — | | | — | | | — | | | — | |
Other expense | | 25,838 | | | 27,343 | | | 52,421 | | | 61,251 | | | 15,071 | | | 18,143 | |
| Total Maui windstorm and wildfires related expenses | | 41,523 | | | 99,476 | | | 2,018,827 | | | 2,046,030 | | | 114,808 | | | 127,112 | |
Insurance recoveries2 | | (1,129) | | | (55,178) | | | (85,781) | | | (94,699) | | | (98,613) | | | (104,580) | |
Deferral treatment approved by the PUC3 | | (27,826) | | | (27,826) | | | (37,960) | | | (37,960) | | | (14,692) | | | (14,692) | |
| Total Maui windstorm and wildfires related expenses, net of insurance recoveries and approved deferral treatment | | $ | 12,568 | | | $ | 16,472 | | | $ | 1,895,086 | | | $ | 1,913,371 | | | $ | 1,503 | | | $ | 7,840 | |
1 Excludes expenses related to discontinued operations amounting to $1.3 million and $11.3 million for 2024 and 2023, respectively.
2 HEI consolidated includes insurance recovery related to the proposed settlement of the securities class action of $47.8 million for 2025. Also includes adjustments related to costs that are no longer probable of recovery under the insurance policies. For 2025, HEI consolidated and Electric utility adjustments amount to $7.6 million, of which, $4.5 million were deferred to a regulatory asset, respectively, and are reported on the line “Deferral treatment approved by the PUC.”
3 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.
On May 4, 2024, HEI and the Utilities reached an agreement to settle indemnification claims asserted by the State of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Hawaii without any admission of fault or responsibility. Under the terms of the agreement, HEI and the Utilities agreed to contribute $18.4 million through the end of 2024 related to the costs of the professional advisors engaged by the State of Hawaii to advise on a variety of matters related to the Maui windstorm and wildfires. Such costs were reflected in Maui windstorm and wildfires related expenses-Other expense in 2024 in the table above.
| | |
Note 3 · Segment financial information |
Reportable segments are strategic business units of the Company that offer different products and services and operate in different regulatory environments. Prior to December 31, 2024, the Company operated and reported on two reportable segments: Electric utility and bank. On December 31, 2024, the Company sold 90.1% of ASB (previously, the bank reportable segment) and presented its results as discontinued operations for all periods presented. Accordingly, the bank reportable segment has been eliminated and the segment information presented herein excludes the results of ASB for all periods presented. All comparable information for the historical periods has been recast to reflect the impact of these changes. The Company now operates and reports on one reportable segment: Electric utility. HEI and its other subsidiaries which are not reportable segments are grouped and reported as an “All Other” non-reportable segment.
The accounting policies of the segments are the same as those described for the Company in the summary of significant accounting policies, except as otherwise indicated and except that federal and state income taxes for each segment are calculated on a “stand-alone” basis. The Company’s chief operating decision makers (CODMs) evaluate segment performance based on net income. Each segment accounts for intersegment sales and transfers as if the sales and transfers were to third parties (i.e., at current market prices). Intersegment revenues consist primarily of Hamakua Energy electricity revenues, interest and preferred stock dividends.
HEI’s CODM is its Chief Executive Officer. The CODM uses net income to evaluate income generated from segment assets (return on assets) in deciding whether to reinvest profits into the segments or into other parts of the entity, such as for acquisitions or to pay HEI common stock dividends. The CODM considers inputs from a variety of sources including the Chief Financial Officer, the General Counsel and presidents of operating units. Net income is used to monitor budget versus actual results. The CODM also uses net income in competitive analysis by benchmarking to HEI’s competitors. The competitive analysis along with the monitoring of budgeted versus actual results are used in assessing performance of the segment and in establishing management’s compensation. The segment level information that is regularly provided to the CODM does not include expense categories other than depreciation and amortization, interest expense, and income taxes.
Hawaiian Electric and its wholly owned operating subsidiaries, Hawaii Electric Light and Maui Electric, are public electric utilities in the business of generating, purchasing, transmitting, distributing and selling electric energy on all major islands in Hawaii other than Kauai, and are regulated by the PUC. Hawaiian Electric, Hawaii Electric Light, and Maui Electric are aggregated within the electric utility segment because they: (1) are involved in the business of supplying electric energy in the same geographical location (i.e., the State of Hawaii), (2) have similar production processes that comprise electric generation, (3) serve similar customers within their franchise territories (e.g., residential, commercial and industrial customers), (4) use similar electric grids to distribute the energy to their customers, (5) are regulated by the PUC and undergo similar rate-making processes, (6) have similar economic characteristics and (7) perform financial reporting oversight and management of the business at the consolidated level. Hawaiian Electric also owns the following nonregulated subsidiaries: Renewable Hawaii, Inc. (RHI), which was formed to invest in renewable energy projects; HE AR INTER LLC (HE AR INTER), which was formed to pursue financing through a secured asset-based (accounts receivable) credit facility. Both RHI and HE AR INTER are included within electric utility segment information provided to the CODMs.
Hawaiian Electric has determined that its CODMs are the Chief Executive Officer and Chief Financial Officer. Net income variance analysis is regularly provided to CODMs and it is used to monitor budget as well as measuring against performance to the same period in the previous year. The CODMs measure the segment performance based on the Hawaiian Electric consolidated net income and segment net income of Hawaii Electric Light and Maui Electric to make decisions to allocate resources. Hawaiian Electric concluded that all of the expense categories for its single reportable segment included in the Consolidated Statement of Income for Hawaiian Electric are the expense categories regularly provided to the CODMs and are significant.
“All Other” includes amounts for the holding companies (HEI and ASB Hawaii), GLST1, and Pacific Current and its operating subsidiary and do not meet the definition of reportable segments.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
ASB Hawaii. ASB Hawaii was formed in 1988 and served as the holding company for ASB prior to its sale on December 31, 2024. ASB Hawaii still retains a 9.9% noncontrolling investment in ASB.
GLST1. 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. Effective March 31, 2025, HEI assigned 60% of the membership interests of GLST1 to Hawaiian Electric. As of December 31, 2025, the assigned equity interests total $287.3 million, which is reported on “Investment in unconsolidated affiliate” on the Utilities’ Consolidated Balance Sheets.
Pacific Current. Pacific Current was formed in 2017 to focus on investing in non-regulated renewable energy and sustainable infrastructure in the State of Hawaii to help achieve the state’s sustainability goals. As part of HEI’s comprehensive review of strategic options for Pacific Current, significant investments of Pacific Current that were made through its subsidiaries, Hamakua Energy, Mauo and Kaʻieʻie Waho were sold in 2025. As of December 31, 2025, Mahipapa is Pacific Current’s remaining operating subsidiary.
Sale of Hamakua Holdings, LLC. On March 10, 2025, Pacific Current closed on the sale of Hamakua Holdings, LLC (Hamakua Holdings), a then wholly owned subsidiary of Pacific Current, to an unaffiliated third party for cash consideration (Hamakua Sale). Hamakua Holdings had two wholly owned subsidiaries: Hamakua Energy, and HAESP, LLC (created in connection with the current on-going Stage 3 RFP process). Hamakua Energy owned a 60-MW combined cycle power plant on Hawaii Island that provides electricity to Hawaii Electric Light under an existing PPA that expires in 2030. As a result and effective as of the closing of the Hamakua Sale, Pacific Current no longer owns either of Hamakua Energy or HAESP, LLC, as wholly owned subsidiaries of Hamakua Holdings. The Company recorded a loss on the sale amounting to $13.2 million as of March 31, 2025, which is included in “Loss on sales of subsidiaries and equity-method investments and impairment loss on assets sold and held for sale” in the Company’s Consolidated Statements of Income for the year ended December 31, 2025.
Sale of solar and Battery Energy Storage System (BESS) facilities. Effective August 1, 2025, HEI closed on the sale of its solar and BESS assets to an unaffiliated third party for cash consideration (Solar Asset Disposition). The Solar Asset Disposition was completed through the sale of the membership interests in Pacific Current, Solar and Storage Operating Company, LLC (PC Opco), a then newly created indirect subsidiary of Pacific Current, which owned all of the membership interest of Pacific Current’s solar and BESS project companies: Mauo, LLC (which owns solar-plus-storage projects totaling 8.6 MW on five University of Hawaii campuses on Oahu and Maui), Kaʻieʻie Waho Company, LLC (which owns a 6-MW solar photovoltaic system that provides renewable energy to Kauai Island Utility Cooperative), Upena, LLC (which owns a solar asset on Oahu) and Alenuihaha Developments, LLC (which owns a collection of renewable energy assets on Oahu and Kauai) (collectively, Project Companies). As a result of the Solar Asset Disposition, effective as of August 1, 2025, Pacific Current no longer owns the Project Companies. The Company recorded an immaterial gain on the Solar Asset Disposition as of September 30, 2025, which is included in “Loss on sales of subsidiaries and equity-method investments and impairment loss on assets sold and held for sale” in the Company’s Consolidated Statements of Income for the year ended December 31, 2025.
In the second quarter of 2025, the Company evaluated the carrying value of the net assets of Pacific Current’s solar/BESS and biomass facilities and concluded the net assets were impaired as of June 30 2025. As a result, the Company recognized a pretax impairment charge of $0.2 million and tax expense and an expected investment tax credit recapture of $5.3 million. The pretax impairment charge is included in “Loss on sale of subsidiaries and equity-method investments and impairment loss on assets sold and held for sale” and the taxes on the impairment and expected investment tax credit recapture is included in “Income tax expense (benefit)” in the Company’s Consolidated Statements of Income for the year ended December 31, 2025.
Assets held for sale-Mahipapa. In addition, in connection with the Solar Asset Disposition and as part of the membership interest purchase agreement pursuant to which the Solar Asset Disposition was conducted (MIPA), but as a separate transaction, Pacific Current agreed to sell all of the membership interest in its biomass subsidiary, Mahipapa, LLC, to the same unaffiliated third party that is party to the MIPA (the Mahipapa Sale), with each of the parties’ obligations to complete the Mahipapa Sale subject to the conditions set forth in the MIPA. Mahipapa owns a 7.5-MW renewable, firm dispatchable closed-loop biomass-
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
to-energy facility on Kauai that provides electricity to Kauai Island Utility Cooperative under a PPA that expires in January 2036.
The net assets of Mahipapa are classified as held for sale in the Company’s Consolidated Balance Sheets as of December 31, 2025. The net assets were classified as current, and are summarized as follows:
| | | | | |
| (in thousands) | December 31, 2025 |
| Property, plant and equipment, net of accumulated depreciation | $ | 46,286 | |
| Other assets | 9,980 | |
| Assets held for sale-current | $ | 56,266 | |
| Long-term debt, net | $ | 51,568 | |
| Other liabilities | 8,235 | |
| Liabilities held for sale-current | $ | 59,803 | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Electric utility reportable segment and All Other information were as follows:
| | | | | | | | | | | | | | | | | |
| (in thousands) | Electric utility | | All Other | | Total |
| 2025 | | | | | |
| | | | | |
| | | | | |
| Revenues | $ | 3,071,182 | | | $ | 15,714 | | | $ | 3,086,896 | |
| Depreciation and amortization | 294,205 | | | 4,714 | | | 298,919 | |
| Interest income | 9,463 | | | 27,466 | | | 36,929 | |
| Interest expense, net | 93,702 | | | 23,632 | | | 117,334 | |
Income (loss) from continuing operations before income taxes | 220,588 | | | (53,659) | | | 166,929 | |
Income tax expense (benefit) | 49,033 | | | (8,385) | | | 40,648 | |
Income (loss) from continuing operations | 171,555 | | | (45,274) | | | 126,281 | |
Dividends and loss on redemption of preferred stock of subsidiaries | 3,340 | | | (179) | | | 3,161 | |
Income (loss) from continuing operations for common stock | 168,215 | | | (45,095) | | | 123,120 | |
Capital expenditures1 | 339,573 | | | 1,629 | | | 341,202 | |
| Assets (at December 31, 2025) | 8,530,520 | | | 392,359 | | | 8,922,879 | |
| 2024 | | | | | |
| | | | | |
| | | | | |
| Revenues | $ | 3,206,700 | | | $ | 13,150 | | | $ | 3,219,850 | |
| Depreciation and amortization | 282,970 | | | 10,563 | | | 293,533 | |
| Interest income | 6,633 | | | 12,729 | | | 19,362 | |
| Interest expense, net | 82,082 | | | 45,125 | | | 127,207 | |
Loss from continuing operations before income taxes | (1,663,914) | | | (127,681) | | | (1,791,595) | |
Income tax benefit | (439,547) | | | (31,415) | | | (470,962) | |
Loss from continuing operations | (1,224,367) | | | (96,266) | | | (1,320,633) | |
| Preferred stock dividends of subsidiaries | 1,995 | | | (105) | | | 1,890 | |
Loss from continuing operations for common stock | (1,226,362) | | | (96,161) | | | (1,322,523) | |
Capital expenditures1 | 329,479 | | | 14,772 | | | 344,251 | |
| Assets (at December 31, 2024) | 7,613,604 | | | 1,317,812 | | | 8,931,416 | |
| 2023 | | | | | |
| | | | | |
| | | | | |
| Revenues | $ | 3,269,521 | | | $ | 17,982 | | | $ | 3,287,503 | |
| Depreciation and amortization | 270,195 | | | 12,111 | | | 282,306 | |
| Interest income | 6,454 | | | 2,651 | | | 9,105 | |
| Interest expense, net | 86,140 | | | 39,392 | | | 125,532 | |
Income (loss) from continuing operations before income taxes | 247,140 | | | (64,840) | | | 182,300 | |
Income tax expense (benefit) | 51,193 | | | (16,659) | | | 34,534 | |
Income (loss) from continuing operations | 195,947 | | | (48,181) | | | 147,766 | |
| Preferred stock dividends of subsidiaries | 1,995 | | | (105) | | | 1,890 | |
Income (loss) from continuing operations for common stock | 193,952 | | | (48,076) | | | 145,876 | |
Capital expenditures1 | 438,775 | | | 3,952 | | | 442,727 | |
Assets (at December 31, 2023) | 7,283,554 | | | 393,818 | | | 7,677,372 | |
1 Contributions in aid of construction balances are included in capital expenditures.
Intercompany electricity sales of the Utilities to HEI and its other subsidiaries are not eliminated because those entities would need to purchase electricity from another source if it were not provided by the Utilities and the revenue and profit on such sales is nominal.
Sales from Hamakua Energy, LLC (Hamakua Energy) to Hawaii Electric Light (a regulated affiliate), up until the close of its sale on March 10, 2025, are eliminated in consolidation (see “related-party transactions” in Note 4).
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
| | |
Note 4 · Electric utility segment |
Regulatory assets and liabilities. The Utilities record regulatory assets and liabilities when they are deemed probable of recovery from or refund to customers. Determining probability requires significant judgment by management and includes considerations of regulatory orders, proposed regulatory treatment, strength of the applications and other available evidence. Regulatory assets represent deferred costs and accrued decoupling revenues which are expected to be recovered through rates over PUC-authorized periods. Generally, the Utilities do not earn a return on their regulatory assets; however, they have been allowed to recover interest on certain regulatory assets and to include certain regulatory assets in rate base. Regulatory liabilities represent amounts included in rates and collected from ratepayers for costs expected to be incurred in the future, or amounts collected in excess of costs incurred that are refundable to customers. For example, the regulatory liability for cost of removal in excess of salvage value represents amounts that have been collected from ratepayers for costs that are expected to be incurred in the future to retire a utility plant. Generally, the Utilities include regulatory liabilities in rate base or are required to apply interest to certain regulatory liabilities. In the table below, noted in parentheses are the original PUC authorized amortization or recovery periods and, if different, the remaining amortization or recovery periods as of December 31, 2025 are noted.
Regulatory assets were as follows:
| | | | | | | | | | | |
| December 31 | 2025 | | 2024 |
| (in thousands) | | | |
Income taxes (8-34 years) | $ | 80,923 | | | $ | 81,102 | |
Maui windstorm and wildfire related costs (to be determined by the PUC) | 80,478 | | | 52,652 | |
Retirement of generating units (9 years) | 36,168 | | | 40,953 | |
Right-Of-Use (ROU) assets (25 years remaining) | 32,586 | | | 19,105 | |
ECRC/PPAC (1 year) | 20,677 | | | 17,418 | |
Vacation earned, but not yet taken (1 year) | 14,174 | | | 13,950 | |
Wildfire Mitigation Plan (WMP) (to be determined by the PUC) | 9,561 | | | — | |
Performance Incentive Mechanisms (PIMs) (1 year) | 8,875 | | | 6,783 | |
COVID-19 related costs (2 years) | 3,597 | | | 6,715 | |
| Retirement benefit plans (balance primarily varies with plans’ funded statuses) | 2,355 | | | 13,755 | |
Decoupling revenue balancing account and RAM (1 year) | — | | | 9,829 | |
Other (1-34 years remaining) | 18,721 | | | 19,057 | |
| Total regulatory assets | $ | 308,115 | | | $ | 281,319 | |
| Included in: | | | |
| Current assets | $ | 50,039 | | | $ | 53,895 | |
| Long-term assets | 258,076 | | | 227,424 | |
| Total regulatory assets | $ | 308,115 | | | $ | 281,319 | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Regulatory liabilities were as follows:
| | | | | | | | | | | |
| December 31 | 2025 | | 2024 |
| (in thousands) | | | |
Cost of removal in excess of salvage value (1-79 years) | $ | 611,729 | | | $ | 601,741 | |
Retirement benefit plans (balance primarily varies with plans’ funded statuses) | 444,271 | | | 279,553 | |
Income taxes (8-34 years) | 281,735 | | | 292,036 | |
Solar tax credits (1-16 years) | 43,814 | | | 46,661 | |
Decoupling revenue balancing account and RAM (1 year) | 29,370 | | | 5,498 | |
Enterprise Resource Planning (ERP) Benefits (to be determined by the PUC) | 11,635 | | | 12,549 | |
Restoration/remediation (to be determined) | 11,083 | | | — | |
ECRC/PPAC (1 year) | 4,668 | | | 4,296 | |
Other (1 year remaining) | 5,839 | | | 1,749 | |
| Total regulatory liabilities | $ | 1,444,144 | | | $ | 1,244,083 | |
| Included in: | | | |
| Current liabilities | $ | 51,997 | | | $ | 26,568 | |
| Long-term liabilities | 1,392,147 | | | 1,217,515 | |
| Total regulatory liabilities | $ | 1,444,144 | | | $ | 1,244,083 | |
The regulatory asset and liability relating to retirement benefit plans was recorded as a result of pension and OPEB tracking mechanisms adopted by the PUC in rate case decisions for the Utilities in 2007 (see Note 11).
Regulatory assets for Maui windstorm and wildfires related costs. The PUC has issued orders authorizing deferred accounting treatment for certain incremental non-labor expenses related to the Maui windstorm and wildfires incurred from August 8, 2023 through December 31, 2025. The approval pertains only to deferred cost treatment for expenses that are not already part of base rates; any actual recovery of deferred costs will be the subject of a separate application(s).
As of December 31, 2025, the Utilities have recorded $80.5 million in regulatory assets for the incremental costs incurred related to the Maui windstorm and wildfires event.
Requests for cost recovery of deferred costs will be the subject of a separate application at which time the PUC will evaluate whether such costs were prudently incurred and determine the extent to which such costs will be eligible for recovery, and the period over which recovery will occur. If the PUC denies recovery of any deferred costs, such costs would be charged to expense in the period that those costs are no longer considered probable of recovery.
Regulatory asset related to retirement of generating units.
Honolulu generating units 8 and 9. On December 22, 2023, the PUC issued a decision and order (D&O) approving the Utilities’ request to establish a regulatory asset for the remaining net book value of the fossil fuel generating units for both Honolulu units 8 and 9 assets that retired on December 31, 2023, and amortize the regulatory asset over approximately nine years. The PUC also ruled that the Utilities may seek to include the regulatory asset in rate base and seek to recover the amortization expense and a return on the unamortized balance of the regulatory asset in the next rate case or rate re-setting proceeding. As of December 31, 2025, the Utilities have recorded $23.4 million in regulatory assets for the remaining net book value of Honolulu generating units 8 and 9.
Waiau generating units 3 and 4. On September 30, 2024, the PUC issued a D&O approving the Utilities’ request to establish a regulatory asset for the remaining net book value of the fossil fuel generating units for both Waiau units 3 and 4 assets that retired on December 31, 2024, and amortize the regulatory asset over approximately nine years. The PUC also ruled that the Utilities may seek to include the regulatory asset in rate base and seek to recover the amortization expense and a return on the unamortized balance of the regulatory asset in the next rate case or rate re-setting proceeding. As of December 31, 2025, the Utilities have recorded $12.7 million in regulatory assets for the remaining net book value of Waiau generating units 3 and 4.
Regulatory liabilities for Enterprise Resource Planning/Enterprise Asset Management (ERP/EAM). The ERP/EAM Implementation Project went live in October 2018. Hawaii Electric Light and Hawaiian Electric began to incorporate their portion of the deferred project costs in rate base and started the amortization over a 12-year period in January 2020 and November 2020, respectively. The PUC required a minimum of $246 million ERP/EAM project-related benefit to be delivered to customers over the system’s 12-year service life.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
In February 2019, the PUC approved a methodology for passing the future cost saving benefits of the ERP/EAM system to customers developed by the Utilities in collaboration with the Consumer Advocate. The Utilities filed a benefits clarification document on June 10, 2019, reflecting $150 million in future net other operation and maintenance (O&M) expense reductions and cost avoidance, and $96 million in capital cost reductions and tax savings over the 12-year service life. To the extent the reduction in O&M expense relates to amounts reflected in electric rates, the Utilities would reduce future rates for such amounts. In October 2019, the PUC approved the Utilities and the Consumer Advocate’s Stipulated Performance Metrics and Tracking Mechanism. As part of the settlement agreement approved in the Hawaiian Electric 2020 test year rate case, the regulatory liability for Hawaiian Electric will be amortized over five years, beginning in November 2020, and the O&M benefits for Hawaiian Electric was considered flowed through to customers. On December 29, 2023, the PUC approved the Utilities’ proposal to accelerate flow-through of the ERP benefits savings currently tracked in regulatory liability accounts to Hawaii Electric Light and Maui Electric customers as part of the customer dividend in the ARA, to mitigate the impact of the Utilities’ recovery of the COVID-19 related costs on customers. See “Regulatory assets for COVID-19 related costs” section below.
As of December 31, 2025, the Utilities’ regulatory liability was $11.6 million (nil for Hawaiian Electric, $4.7 million for Hawaii Electric Light and $6.9 million for Maui Electric) for the O&M expense savings that are being amortized or to be included in future rates. At the PUC’s direction, the Utilities have been filing Annual Enterprise System Benefits (AESB) reports on the achieved benefits savings.
Regulatory assets for COVID-19 related costs. In a D&O issued on December 29, 2023, as clarified by an order issued on February 27, 2024, the PUC approved the Utilities’ recovery of the COVID-19 related deferred costs up to $8.7 million evenly over a three-year recovery period from June 1, 2024 and ending May 31, 2027 through the Z-factor in the ARA. As of December 31, 2025, the Utilities have $3.6 million remaining in regulatory assets for deferral of COVID-19 related costs.
Regulatory assets for suspension of disconnections related costs. Based on circumstances related to the Maui windstorm and wildfires, on August 31, 2023 and subsequently on October 13, 2023, the PUC issued orders directing all regulated utilities located on, or providing utility service on Maui, among other things, (i) to suspend disconnections of services and associated disconnection fees beginning from August 8, 2023, through the end of the emergency relief period established by the Governor’s Emergency Proclamations related to the Maui windstorm and wildfires, which currently continues through March 7, 2026 (Suspension Period); (ii) to suspend any and all rules and provisions of individual utility tariffs that prevent or condition re-connection of disconnected customers during the Suspension Period; (iii) not to charge customers interest on past due payments or impose any late payment fees through the Suspension Period; (iv) to establish regulatory assets to record costs directly related to the suspension of disconnections, and to record receipt of governmental aid and donation-based aid, loans or grants, and/or all other assistance measures, and any cost savings realized; and (v) to file a notice with the PUC regarding any upcoming application or other request pursuant to HRS Sections 269-16.3, -17, -17.5, -18, -19, or -19.5 and/or regarding any significant financial change to the Maui utility, at least 60 days prior to filing such application or other request with the PUC. The orders also discourage the filing of emergency or general rate increases in response to the emergency situation. On December 23, 2025, the PUC revised the notice of financial change reporting requirement (item v above) to apply only to the Utilities.
In future proceedings, the PUC will assess the utility’s request for recovery of these regulatory assets including whether it is reasonable and necessary, the appropriate period of recovery for the approved amount of regulatory assets, any amount of carrying costs thereon, any savings directly attributable to suspension of disconnects, and other related matters. As of December 31, 2025, the Utilities have recorded $5.4 million in regulatory assets for the incremental costs incurred due to the suspension of disconnections.
Regulatory assets for Wildfire Mitigation Plan (WMP). On December 31, 2025, the PUC approved the Utilities’ 2025-2027 WMP (also referred to as the Utilities’ 2025-2027 Wildfire Safety Strategy or 2025-2027 WSS). The Utilities’ 2025-2027 WMP is a three-year action plan that targets a 70% reduction wildfire risk associated with utility infrastructure. The approval of the 2025-2027 WMP, however, does not constitute approval of cost recovery for any WMP-related costs. The Utilities’ request for cost recovery is currently under review by the PUC in a separate proceeding. On January 14, 2026, the PUC issued an order authorizing deferred accounting treatment for the Utilities’ O&M expenses incurred between June and December 2025 (2025 O&M expenses) to implement their WMP. Accordingly, the Utilities established a regulatory asset account, and as of December 31, 2025, the Utilities have recorded $9.6 million in regulatory assets for the deferral of the 2025 O&M expenses to implement the WMP. Recovery of the Utilities’ 2025 O&M expenses are currently under PUC review in the EPRM cost recovery proceeding.
Regulatory liability restoration/remediation. The Utilities have received insurance proceeds related to damaged utility properties and environmental remediation. As the proceeds represent the obligations to use the current collections of insurance proceeds for future costs, the Utilities classify such obligations as regulatory liability. As of December 31, 2025, the Utilities have recorded a regulatory liability of $11.1 million.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Major customers. The Utilities received 11% ($344 million), 11% ($369 million) and 12% ($376 million) of their operating revenues from the sale of electricity to various federal government agencies in 2025, 2024 and 2023, respectively.
Cumulative preferred stock redemption. On October 15, 2025, the Utilities redeemed all of their issued and outstanding cumulative preferred stock for a total of $35.3 million. The cumulative preferred stock of each series was redeemed with its respective premiums, if applicable. Dividends on the cumulative preferred stock ceased to accrue on October 15, 2025. Upon redemption, all rights of the preferred stock holders ceased to exist, except for the right to payment of the redemption price. The loss on redemption of cumulative preferred stock was $1.8 million.
| | | | | | | | | | | |
| October 15, 2025 | Voluntary
liquidation price | | Redemption
price |
| Series | | | |
| C, D, E, H, J and K (Hawaiian Electric) | $ | 20 | | | $ | 21 | |
| I (Hawaiian Electric) | 20 | | | 20 | |
| G (Hawaii Electric Light) | 100 | | | 100 | |
| H (Maui Electric) | 100 | | | 100 | |
Related-party transactions. HEI charged the Utilities $6.2 million, $5.5 million and $5.2 million for general management and administrative services in 2025, 2024 and 2023, respectively. The amounts charged by HEI to its subsidiaries for services provided by HEI employees are allocated primarily on the basis of time expended in providing such services.
In 2025, 2024 and 2023, Hamakua Energy (an indirect subsidiary of HEI) sold energy and capacity to Hawaii Electric Light (subsidiary of Hawaiian Electric and indirect subsidiary of HEI) under a power purchase agreement (PPA) in the amount of $7 million, $35 million and $71 million, respectively. On March 10, 2025, the sale of Hamakua Energy was closed and Hamakua Energy is no longer owned by Pacific Current.
Hawaiian Electric’s short-term borrowings from HEI totaled nil at December 31, 2025 and 2024. Borrowings among the Utilities are eliminated in consolidation. Interest charged by HEI to Hawaiian Electric was nil for the years ended December 31, 2025 and 2024.
Consolidated variable interest entities. The HE AR INTER LLC and its direct subsidiary, HE AR BRWR LLC, (collectively, the Special Purpose Entities or SPEs) are bankruptcy remote, direct and indirect wholly owned subsidiaries of the Utilities. Pursuant to the asset-based lending facility (ABL Facility) credit agreement, the Utilities sell certain accounts receivable to the SPEs as collateral, which in turn, obtain financing from financial institutions. As of December 31, 2025, the ABL Facility remains undrawn and the SPEs have $317.8 million of net accounts receivable, included in “Customer accounts receivable, net,” and “Accrued unbilled revenues, net,” on the Utilities’ Consolidated Balance Sheets and “Accounts receivable and unbilled revenues, net,” on the Company’s Consolidated Balance Sheets.
The SPEs are considered VIEs due to insufficient equity investment at risk. The most significant activities that impact the economic performance of the SPEs are cash and financing management. The Utilities are considered the primary beneficiary as the Utilities direct the activities related to cash and financing management and therefore, are required to consolidate the SPEs. Although the SPEs are direct and indirect wholly owned consolidated subsidiaries of the Utilities, the SPEs are legally separate from the Utilities. The assets of the SPEs (which are primarily accounts receivables) are not available to creditors of the Utilities.
Unconsolidated variable interest entities.
Power purchase agreements. As of December 31, 2025, the Utilities had four power purchase agreements (PPAs) for firm capacity and other PPAs with independent power producers (IPPs) and Schedule Q providers (i.e., customers with cogeneration and/or power production facilities who buy power from or sell power to the Utilities), none of which are currently required to be consolidated as VIEs.
Pursuant to the current accounting standards for VIEs, the Utilities are deemed to have a variable interest in Kalaeloa Partners, L.P. (Kalaeloa) and Hamakua Energy by reason of the provisions of the PPA that the Utilities have with the two IPPs. However, management has concluded that the Utilities are not the primary beneficiary of Kalaeloa and Hamakua Energy because the Utilities do not have the power to direct the activities that most significantly impact the two IPPs’ economic performance nor the obligation to absorb their expected losses, if any, that could potentially be significant to the IPPs. Thus, the Utilities have not consolidated Kalaeloa and Hamakua Energy in their consolidated financial statements. On March 10, 2025, the sale of Hamakua Energy was closed and Hamakua Energy is no longer owned by Pacific Current. Hamakua Energy was an indirect subsidiary of Pacific Current and was included in HEI’s consolidated financial statements up until sale date.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the other PPAs with IPPs, the Utilities have concluded that the consolidation of the IPPs was not required because either the Utilities do not have variable interests in the IPPs due to the absence of an obligation in the PPAs for the Utilities to absorb any variability of the IPPs, or the IPP was considered a “governmental organization,” and thus excluded from the scope of accounting standards for VIEs. The consolidation of any significant IPP could have a material effect on the consolidated financial statements, including the recognition of a significant amount of assets and liabilities and, if such a consolidated IPP were operating at a loss and had insufficient equity, the potential recognition of such losses. If the Utilities determine they are required to consolidate the financial statements of such an IPP and the consolidation has a material effect, the Utilities would retrospectively apply accounting standards for VIEs to the IPP.
GLST1. Effective March 31, 2025, HEI assigned 60% of the membership interests of GLST1 to Hawaiian Electric. The Utilities are deemed to have a variable interest in GLST1 but concluded that the Utilities are not the primary beneficiary of GLST1. As the Utilities have the ability to exercise significant influence over GLST1, the Utilities accounted for the membership interests under the equity method of accounting. As of December 31, 2025, the assigned equity interests total $287.3 million, which is reported on “Investment in unconsolidated affiliate” on the Utilities’ Consolidated Balance Sheets.
Commitments and contingencies.
Contingencies. The Utilities are subject in the normal course of business to legal, regulatory and environmental proceedings. Excluding the potential liabilities from the Maui windstorm and wildfires, management does not anticipate that the aggregate ultimate liability arising out of these pending or threatened legal proceedings will be material to its financial position. However, the Utilities cannot rule out the possibility that such outcomes could have a material effect on the results of operations or liquidity for a particular reporting period in the future. The Utilities record loss contingencies when the outcome of such proceedings is probable and when the amount of the loss is reasonably estimable. The Utilities also evaluate, on a continuous basis, whether developments in such proceedings could cause these assessments or estimates to change. Assessment regarding future events is required when evaluating whether a loss is probable or reasonably possible, and as to whether such loss or a range of such loss is estimable. Management is often unable to estimate a reasonably possible loss, or a range of loss, particularly in cases in which: (i) the damages sought are indeterminate or the basis for the damages claimed is not clear; (ii) proceedings are in early stages; (iii) discovery is not complete; (iv) the matters involve novel or unsettled legal theories; (v) significant facts are in dispute; (vi) a large number of parties are represented (including circumstances in which it is uncertain how liability, if any, would be shared among multiple defendants); (vii) a lower court or administrative agency’s decision or ruling has been appealed; and/or (viii) a wide range of potential outcomes exist. In such cases, there may be considerable uncertainty regarding the timing or ultimate resolution, including any possible loss, fine, penalty, or business impact.
August 2023 Maui windstorm and wildfires. See Note 2.
Hu Honua Bioenergy, LLC (Hu Honua). In May 2012, Hawaii Electric Light signed a PPA, which the PUC approved in December 2013, with Hu Honua for 21.5 MW of renewable, dispatchable firm capacity fueled by locally grown biomass from a facility on the island of Hawaii, scheduled to be in service in 2016. However, Hu Honua encountered construction and litigation delays, which resulted in the termination of the original PPA. Following the termination, Hu Honua filed a lawsuit in the U.S. District Court for the District of Hawaii. The parties reached a settlement that was conditioned on the PUC’s timely, non-appealable final approval of an amended and restated PPA dated May 9, 2017. On May 23, 2022, following a contested case hearing, the PUC issued a decision and order (D&O) denying the amended and restated PPA, which was affirmed by the Hawaii Supreme Court on March 13, 2023. On November 16, 2023, Hu Honua filed its Motion for Leave to File Third Amended and Supplemental Complaint and for Permissive Joinder with the U.S. District Court for the District of Hawaii, asking the court to grant it leave to file a Third Amended and Supplemental Complaint, which would amend its claims and add three new proposed defendants. The court issued a D&O on the motion on April 2, 2024, which was consistent with Hawaii Electric Light's position, only allowing amendments that were agreed to and not allowing Hu Honua to add new claims or parties, effectively leaving Hu Honua with its previously-pled breach of contract and antitrust claims. Hu Honua filed its objection to the order on April 16, 2024 and the Hawaiian Electric defendants filed their response to the objection on April 30, 2024. On September 12, 2024, the court issued its decision affirming the April 2, 2024 order. Hu Honua filed its Third Amended and Supplemental Complaint on October 25, 2024, and after discussion with the Hawaiian Electric defendants and the court, filed its Amended Third Amended and Supplemental Complaint on December 3, 2024. The Hawaiian Electric defendants filed their Motion to Compel Arbitration on the contract claims and Motion to Dismiss the antitrust claims on January 7, 2025, and the matter was heard by the U.S. District Court on March 31, 2025. On April 17, 2025, the U.S. District Court granted Hawaii Electric Light’s Motion to Dismiss in part, dismissing the Federal Antitrust claims, but declining to exercise jurisdiction over the State antitrust claim. With the U.S. District Court declining to exercise jurisdiction over the remaining State claims, the Motion to Compel Arbitration on the contract claims was denied as moot. The remaining State claims, including the contract claims and the State antitrust claim, were dismissed without prejudice.
On December 24, 2024, Hawaii Electric Light received correspondence from Hu Honua, stating that Hu Honua sought to sell energy and capacity as a Qualifying Facility under Hawaii’s implementation of The Public Utility Regulatory Policies Act. On March 18, 2025, Hawaii Electric Light and Hu Honua informed the PUC that negotiations regarding this potential
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
arrangement were ongoing with the intention to reach agreement on material terms and requested an extension of time to complete negotiations and for Hawaii Electric Light to submit a petition for hearing under the Hawaii Administrative Rules. On June 3, 2025, Hawaii Electric Light and Hu Honua provided an update to the PUC stating that substantial progress had been made and an agreement in principle had been reached on major terms. The update informed the PUC that the parties would continue negotiations with the intent to submit an application for approval of a PPA upon completion of such efforts.
On May 14, 2025, Hu Honua filed its notice of appeal in federal Ninth Circuit court. Due to the ongoing negotiations between Hu Honua and Hawaii Electric Light, the briefing schedule has been vacated. On November 10, 2025, Hu Honua provided a status report to the Ninth Circuit court, informing the court that the parties are making progress toward a final PPA and asking that the administrative closure remain in place for an additional six months. On November 13, 2025, the Ninth Circuit court extended the administrative closure until February 13, 2026, and asked for another status report by that date. The court noted that at any time before that date, any party may request that the appeal be reopened.
On May 16, 2025, Hu Honua filed its complaint in state court for the remaining State claims. Hu Honua has granted Hawaii Electric Light an open-ended extension to answer or otherwise respond to the State complaint while negotiations are ongoing. The State court ordered a scheduling conference for August 12, 2025, which was subsequently postponed to July 7, 2026, to allow the parties to continue ongoing settlement discussions.
Molokai New Energy Partners (MNEP). In July 2018, the PUC approved Maui Electric’s PPA with MNEP to purchase solar energy from a photovoltaic (PV) plus battery storage project. The 4.88 MW PV and 3 MW Battery Energy Storage System (BESS) project was to deliver no more than 2.64 MW at any time to the Molokai system. On March 25, 2020, MNEP filed a complaint in the U.S. District Court for the District of Hawaii against Maui Electric claiming breach of contract. On June 3, 2020, Maui Electric provided a Notice of Default and Termination of the PPA to MNEP terminating the PPA with an effective date of July 10, 2020. Thereafter, MNEP filed an amended complaint to include claims relating to the termination and Hawaiian Electric filed its answer to the amended complaint on September 11, 2020, disputing the facts presented by MNEP and all claims within the original and amended complaint. Currently, the discovery phase is ongoing. Trial was initially set to commence on September 16, 2025, was continued to February 18, 2026 and is now set to begin November 13, 2026.
Environmental regulation. The Utilities are subject to environmental laws and regulations that regulate the operation of existing facilities, the construction and operation of new facilities and the proper cleanup and disposal of hazardous waste and toxic substances.
Hawaiian Electric, Hawaii Electric Light and Maui Electric, like other utilities, periodically encounter petroleum or other chemical releases associated with current or previous operations. The Utilities report and take action on these releases when and as required by applicable law and regulations. The Utilities believe the costs of responding to such releases identified to date will not have a material effect, individually or in the aggregate, on Hawaiian Electric’s consolidated results of operations, financial condition or liquidity.
Former Molokai Electric Company generation site. In 1989, Maui Electric acquired Molokai Electric Company. Molokai Electric Company had sold its former generation site (Site) in 1983 but continued to operate at the Site under a lease until 1985 and left the property in 1987. The Environmental Protection Agency (EPA) has since identified environmental impacts in the subsurface soil at the Site. In cooperation with the State of Hawaii Department of Health and EPA, Maui Electric further investigated the Site and the adjacent parcel to determine the extent of impacts of polychlorinated biphenyls (PCBs), residual fuel oils and other subsurface contaminants. Maui Electric has a reserve balance of $2.4 million as of December 31, 2025, representing the probable and reasonably estimable undiscounted cost for remediation of the Site and the adjacent parcel based on presently available information; however, final costs of remediation will depend on the cleanup approach implemented.
Pearl Harbor sediment study. In July 2014, the U.S. Navy notified Hawaiian Electric of the Navy’s determination that Hawaiian Electric is a Potentially Responsible Party under CERCLA responsible for the costs of investigation and cleanup of PCB contamination in sediment in the area offshore of the Waiau Power Plant as part of the Pearl Harbor Superfund Site. Hawaiian Electric was also required by the EPA to assess potential sources and extent of PCB contamination onshore at Waiau Power Plant.
As of December 31, 2025, the reserve account balance recorded by Hawaiian Electric to address the PCB contamination was $9.7 million. The reserve balance represents the probable and reasonably estimable undiscounted cost for the onshore and offshore investigation and remediation. The final remediation costs will depend on the actual onshore and offshore cleanup costs.
Endangered Species Act. The Utilities received a notice under the federal Endangered Species Act, from Earthjustice on behalf of the American Bird Conservancy and Conservation Council for Hawaii (Conservation Groups) in January 2024. The notice is the pre-cursor to a citizen’s suit under the Endangered Species Act. The notice alleges that the Utilities are out of compliance with the Act due to alleged impacts on endangered seabirds caused by the Utilities’ powerlines, street lights and facility lights on Maui and Lanai. At the time the notice was served, the Utilities were already in the process of drafting a
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Habitat Conservation Plan (HCP) with respect to the powerlines and will be applying for associated state and federal take/license permits. Notwithstanding, the notice asserts that the scope of the HCP should be broader and additional interim measures are necessary while the HCP and related permits are pending.
After negotiations among the parties a complaint was filed on November 12, 2024, regarding the powerlines and on December 11, 2024, the court approved a settlement agreement. Pursuant to that agreement the Utilities will continue the HCP process and take specific actions to minimize and mitigate the potential impact of the Utilities’ powerlines while the document is being prepared. The agreement also contains additional requirements that include coordination with the Conservation Groups with various aspects of the HCP and powerline operations, and continuing the Utilities’ commitment to a species mitigation project with University of Hawaii Foundation to monitor, protect and increase the population of Hawaiian Petrels.
The street and facility lights aspect of the notice was not resolved and a second complaint was filed on November 19, 2024, that includes the County of Maui as a party. Hawaiian Electric and Maui Electric answered the complaint on December 12, 2024 and at this time, the parties are engaging in discovery and settlement discussions to try and resolve the matter. On July 3, 2025, an interim agreement was executed by the parties with respect to foregoing the need for injunctive relief in 2025. However, the Utilities are unable to determine the ultimate outcome or the amount of any possible loss. A trial is set for April 20, 2026.
Commitments.
Purchase commitments. As of December 31, 2025, the Utilities’ estimated future minimum payments pursuant to purchase obligations related to material contracts for the following five years and thereafter are as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Payments Due | | |
| (in millions) | 2026 | | 2027 | | 2028 | | 2029 | | 2030 | | Thereafter | | Total |
| | | | | | | | | | | | | |
Firm capacity PPAs | $ | 75 | | | $ | 75 | | | $ | 70 | | | $ | 70 | | | $ | 70 | | | $ | 156 | | | $ | 516 | |
| Renewable dispatchable generation plus energy storage and energy storage PPAs | 101 | | | 102 | | | 101 | | | 101 | | | 101 | | | 1,518 | | | 2,024 | |
Other renewable PPA | 1 | | | 4 | | | 4 | | | 4 | | | 4 | | | 65 | | | 82 | |
Fuel transportation | 7 | | | 2 | | | — | | | — | | | — | | | — | | | 9 | |
Total | $ | 184 | | | $ | 183 | | | $ | 175 | | | $ | 175 | | | $ | 175 | | | $ | 1,739 | | | $ | 2,631 | |
Firm capacity PPAs. The Utilities are committed to purchase from four firm capacity PPAs for a total of 368.7 megawatts (MW) of firm capacity, which expire at various dates through 2033.
Renewable dispatchable generation plug energy storage and energy storage PPAs. The Utilities also have long-term renewable PPAs with IPPs from the issuances of Stage 1 and 2 renewable projects. The Utilities have additional annual payments of $25 million when two projects began commercial operations in 2025. As of December 31, 2025, a total of nine projects provides the Utilities capacity of 301.5 MW, with 1,771 MWh batteries. The contracts expire at various dates through 2050.
Other renewable PPA. The Utilities also have a long-term renewable PPA that provides the Utilities capacity of 10.56 MW, which expires in 2046.
Fuel transportation lease contract. The Utilities entered into an inter-island fuel transportation contract, expiring in 2027.
Purchased power expense and recovery. The PUC has approved PPACs for the Utilities to recover purchased power capacity, operation and maintenance (O&M) and other non-energy costs related to all aforementioned PPAs. In addition, the Utilities are able to recover fuel component of the energy charges for firm capacity PPAs as well as costs associated to fuel transportation through ECRC.
In general, the Utilities base their payments under the PPAs upon available capacity and actual energy supplied and they are generally not required to make payments for capacity if the contracted capacity is not available, and payments are reduced, under certain conditions, if available capacity drops below contracted levels. In general, the payment rates for capacity have been predetermined for the terms of the agreements. The Utilities do not operate, or participate in the operation of, any of the facilities that provide power under the agreements. Title to the facilities does not pass to Hawaiian Electric or its subsidiaries upon expiration of the agreements, and the agreements do not contain bargain purchase options for the facilities.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Purchases from all IPPs were as follows:
| | | | | | | | | | | | | | | | | | | | |
| Years ended December 31 | | 2025 | | 2024 | | 2023 |
| (in millions) | | | | | | |
| Kalaeloa | | $ | 274 | | | $ | 291 | | | $ | 298 | |
| HPOWER | | 71 | | | 74 | | | 70 | |
Hamakua Energy | | 37 | | | 35 | | | 71 | |
| Puna Geothermal Venture | | 41 | | | 56 | | | 38 | |
Kapolei Energy Storage | | 24 | | | 24 | | | — | |
| Wind IPPs | | 116 | | | 130 | | | 125 | |
| Solar IPPs | | 110 | | | 84 | | | 72 | |
Other IPPs1 | | 5 | | | 9 | | | (2) | |
| Total IPPs | | $ | 678 | | | $ | 703 | | | $ | 672 | |
1 Includes hydro power and other PPAs.
Utility projects. Many public utility projects require PUC approval and various permits from other governmental agencies. Difficulties in obtaining, or the inability to obtain, the necessary approvals or permits or community support can result in significantly increased project costs or even cancellation of projects. In the event a project does not proceed, or if it becomes probable the PUC will disallow cost recovery for all or part of a project, or if PUC-imposed caps on project costs are expected to be exceeded, project costs may need to be written off in amounts that could result in significant reductions in Hawaiian Electric’s consolidated net income.
Waena Battery Energy Storage System Project. In September 2020, Maui Electric filed a PUC application to purchase and install a 40 MW BESS at its Waena Site in Central Maui. In December 2023, the PUC approved Maui Electric’s request to commit funds estimated at $82.1 million, for the purchase and installation of the project, and to recover costs for the project under Exceptional Project Recovery Mechanism. Project costs incurred as of December 31, 2025 amount to $20.0 million. In July 2025, the PUC approved the Utilities’ request to authorize recovery of costs in addition to the amounts approved in December 2023 due to the uncertainty of changes in law, limited to the lesser of either the actual costs or 20% over the approved estimated capital costs.
Climate Adaptation Transmission and Distribution Resilience Program. The Utilities maintain that improving resiliency of the electric grid is an urgent matter and recognizes that evolving climate dynamics are making Hawaii increasingly vulnerable to severe weather events. On January 31, 2024, the PUC approved the Utilities’ request to commit an estimated $189.7 million in funds for the Climate Adaptation Transmission and Distribution Resilience Program, over a project period of five years. The project will focus on, among other things, system hardening in wildfire risk areas including installing video camera and weather monitors in wildfire risk areas and strengthening transmission lines to help prevent ignition enable quicker response and to add situational awareness.
The project costs to be recovered through Exceptional Project Recovery Mechanism is subject to a cap of $95 million and any amount in excess will be subject to the PUC’s further review. On August 7, 2024, the Utilities received a notification from the U.S. Department of Energy that their application for $95 million in federal funds under the Infrastructure Investment and Jobs Act (IIJA) was officially awarded. On August 20, 2024, the Utilities submitted a copy of their executed agreement with the Department of Energy to the PUC. On November 18, 2024, the Utilities filed their August 2024 - August 2025 Forward Looking Annual Report. Project costs incurred as of December 31, 2025 amount to $36.3 million.
In 2025, President Trump has issued multiple executive orders that impact federal funding. The Utilities continue to monitor for any new executive orders and any changes that are passed down through the federal contracting officer for the Resilience Program.
Asset retirement obligations. Asset retirement obligations (AROs) represent legal obligations associated with the retirement of certain tangible long-lived assets, are measured as the present value of the projected costs for the future retirement of specific assets and are recognized in the period in which the liability is incurred if a reasonable estimate of fair value can be made. The Utilities’ recognition of AROs have no impact on their earnings. The cost of the AROs is recovered over the life of the asset through depreciation. AROs recognized by the Utilities relate to legal obligations associated with the retirement of plant and equipment, including removal of asbestos and other hazardous materials.
The Utilities recorded AROs related to: 1) the removal of retired generating units, certain types of transformers and underground storage tanks; 2) the abandonment of fuel pipelines, underground injection and supply wells; and 3) the removal of equipment and restoration of leased land used in connection with Utility-owned renewable and dispatchable generation facilities.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Changes to the ARO liability included in “Other liabilities” on Hawaiian Electric’s balance sheet were as follows:
| | | | | | | | | | | |
| (in thousands) | 2025 | | 2024 |
| Balance, January 1 | $ | 12,492 | | | $ | 12,009 | |
| Accretion expense | 506 | | | 484 | |
| Liabilities incurred | — | | | — | |
| Liabilities settled | (3) | | | (1) | |
| | | |
| Balance, December 31 | $ | 12,995 | | | $ | 12,492 | |
The Utilities have not recorded AROs for assets that are expected to operate indefinitely or where the Utilities cannot estimate a settlement date (or range of potential settlement dates). As such, ARO liabilities are not recorded for certain asset retirement activities, including various Utilities-owned generating facilities and certain electric transmission, distribution and telecommunications assets resulting from easements over property not owned by the Utilities.
Regulatory proceedings.
Decoupling. Decoupling is a regulatory model that is intended to provide the Utilities with financial stability and facilitate meeting the State of Hawaii’s goals to transition to a clean energy economy and achieve an aggressive renewable portfolio standard. Decoupling delinks the utility’s revenues from the utility’s sales, removing the disincentive to promote energy efficiency and accept more renewable energy. Decoupling continues under the PBR Framework.
Performance-based regulation framework. On December 23, 2020, the PUC issued a decision and order (PBR D&O) establishing the PBR Framework to govern the Utilities. The PBR Framework incorporates an annual revenue adjustment (ARA) and a suite of new regulatory mechanisms in addition to previously established regulatory mechanisms. Under the PBR Framework, the decoupling mechanism (i.e., the Revenue Balancing Account (RBA)) established by the previous regulatory framework will continue. The existing cost recovery mechanisms continue as previously implemented (e.g., the Energy Cost Recovery Clause (ECRC), Purchased Power Adjustment Clause (PPAC), Demand-Side Management surcharge, Renewable Energy Infrastructure Program, Demand Response Adjustment Clause, Pension and Other Post-Employment Benefits (OPEB) tracking mechanisms). In addition to annual revenues provided by the ARA, the Utilities may seek relief for extraordinary projects or programs through the Exceptional Project Recovery Mechanism (EPRM) (formerly known as the Major Project Interim Recovery adjustment mechanism) and earn financial rewards for exemplary performance as provided through a portfolio of Performance Incentive Mechanisms (PIMs) and Shared Savings Mechanisms (SSMs). The PBR Framework incorporates a variety of additional performance mechanisms, including Scorecards, Reported Metrics, and an expedited Pilot Process. The PBR Framework also contains a number of safeguards, including a symmetric Earnings Sharing Mechanism (ESM) which protects the Utilities and customers from excessive earnings or losses, as measured by the Utilities’ achieved rate-making return on average common equity (ROACE) and a Re-Opener mechanism, under which the PUC will open an examination, at its discretion, to determine if adjustments or modifications to specific PBR mechanisms are appropriate. The PBR Framework became fully effective on June 1, 2021. Changes to the existing PIMs and SSMs have been made as separate requests and are discussed further below.
On June 19, 2024, and July 30, 2024, the PUC issued orders providing guidance regarding the comprehensive evaluation of the PBR Framework (PBR Framework Review). The PBR Framework implemented a five-year multi-year rate period (MRP), during which there will be no general rate case applications. The current MRP will end on May 31, 2026, and the next MRP (MRP2) will commence on January 1, 2027. The period in between these dates will be used to address implementation details that may arise ahead of MRP2. The PBR Framework Review, currently regarded as the remaining phases will proceed as follows: (i) Phase 5: the evaluation of the current PBR Framework, (ii) Phase 6: the examination of proposal for modifications to the PBR Framework, and (iii) Phase 7: the implementation of modifications prior to MRP2 commencement. PBR working group meetings were held in 2024 which discussed issues and considerations regarding re-basing target revenues for MRP2.
On November 8, 2024, the PUC issued an order establishing a briefing schedule for determining whether to re-base target revenues. On December 5, 2024, the parties timely submitted their respective briefs addressing the issues of whether and how to re-base target revenues.
In its order issued on February 27, 2025, the PUC concluded that Utilities’ target revenues should be re-based for MRP2 and allowed the Utilities to file a single, consolidated application that presents their requested adjustment to target revenues. The proceeding to re-base the Utilities’ target revenues for MRP2 shall be bifurcated into two tracks, with the first track focused on reaching a decision on the Utilities’ revenue requirements prior to the commencement of MRP2 and the second track focused on making a final determination on the revenue requirement and addressing the rate design component.
On April 4, 2025, the PUC established a briefing schedule for the parties to present their positions regarding their evaluation of the PBR Framework. Timely opening and reply briefs were filed by the parties on May 5, 2025 and on May 19, 2025, respectively. On August 13, 2025, the PUC issued an order concluding Phase 5, identifying which specific PBR
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
mechanisms would be prioritized for examination in Phase 6, and provided a tentative schedule framework for Phase 6. The PUC stated that it intends to focus Phase 6 on examining modifications to the inflation factor, customer dividend, ESM, revenue opportunities afforded by the X-Factor and EPRM guidelines, and PIMs portfolio.
On August 28, 2025, the Utilities filed a request to extend the time to file a rate case in order to allow collaboration among the PBR working group parties on an alternative rate re-basing proposal that could eliminate the need for a general rate case application and process. Confirmation was also sought that if a non-rate case re-basing proposal is explored but does not result in a proposal supported by the Utilities, they could file a rate case in the second half of 2026 utilizing a 2027 test year. On September 29, 2025, the PUC granted the Utilities’ request, subject to conditions: including (i) the Utilities are not expected to file their re-basing application by year-end 2025, as originally scheduled, (ii) the Utilities shall collaborate with the parties to attempt to develop an alternative proposal for submission to the PUC no later than January 7, 2026, (iii) if any party opposes or does not agree with any submitted alternative proposal, they shall file a statement describing their opposition and the reasons by January 14, 2026, (iv) if the parties are unsuccessful at developing an alternative proposal or if the PUC ultimately rejects any submitted alternative proposal, the Utilities shall file their re-basing application in the second half of 2026, using a 2027 test year and (v) depending on outcome, the PUC may defer the start of MRP2 beyond January 2027.
On December 8, 2025, the Utilities, together with support from certain PBR parties, filed a request to extend the time to submit the alternative rate re-basing proposal by 30 days to February 6, 2026, with a corresponding extension to February 13, 2026, for statements from any party who opposes or does not agree with any submitted alternative proposal describing their opposition and the reasons. On December 16, 2025, the PUC granted the Utilities’ request to extend the deadline for the submission of an alternative re-basing proposal from January 7, 2026 to February 6, 2026 and affirmed (i) that any proposal submitted by this deadline must comport with the PUC’s prior guidance, (ii) if the parties are unsuccessful at developing an alternative proposal for the PUC’s review or if the PUC ultimately rejects any submitted alternative proposal, the Utilities shall resume work on their re-basing application utilizing a 2027 test year and file the re-basing application in the second half of 2026. The PUC correspondingly modified the deadline for parties to submit a statement of opposition to any alternative proposal from January 14, 2026 to February 13, 2026.
On January 28, 2026, the Utilities requested a final extension to file the alternative PBR re-basing proposal on May 7, 2026 to allow for additional time for the working group parties to develop PIMs and other PBR framework modifications. On February 12, 2026, the Utilities filed a written update with the PUC, which explained that the additional time requested will allow the parties to explore re-basing and consideration of other PBR Framework modifications in a more synchronized manner, streamline Phase 6 and potentially save time and resources for both the PUC and parties. On February 24, 2026, the PUC granted in part the Utilities’ extension request, extending the deadline to submit an alternative re-basing proposal to March 6, 2026, to allow the PUC to promptly proceed with its review of the re-basing proposal. The PUC also extended the deadline for parties to submit any opposition to the alternative re-basing proposal to March 13, 2026. The PUC confirmed that it will resume Phase 6 following resolution of the alternative re-basing proposal.
Annual revenue adjustment mechanism. The PBR Framework established a five-year MRP during which there will be no general rate cases. Target revenues are adjusted according to an index-driven ARA based on (i) an inflation factor, (ii) a predetermined X-factor to encompass productivity, which is set at zero, (iii) a Z-factor to account for exceptional circumstances not in the Utilities’ control and (iv) a customer dividend consisting of a negative adjustment of 0.22% of adjusted revenue requirements compounded annually and a flow through of the “pre-PBR” savings commitment from the management audit recommendations developed in a prior docket at a rate of $6.6 million per year from 2021 to 2025. The ARA mechanism replaced the previous revenue adjustment mechanism (RAM). RAM revenue adjustments approved by the PUC in 2020 continue to be included in the RBA provision’s target revenue and RBA rate adjustment to the extent such adjustments are not included in base rate unless modified with PUC approval.
Earnings sharing mechanism. The PBR Framework established a symmetrical ESM for achieved rate-making ROACE outside of a 300 basis points deadband above or below the current authorized ROACE of 9.5% for each of the Utilities (i.e., above 12.5% or below 6.5%). There is a 50/50 sharing between customers and Utilities for the achieved rate-making ROACE falling within 150 basis points outside of the deadband in either direction, and a 90/10 sharing for any further difference. A reopening or review of the PBR terms may be triggered if the Utilities credit rating outlook indicates a potential credit downgrade below investment grade status, or if its achieved rate-making ROACE enters the outer most tier of the ESM.
On August 31, 2023, the PUC issued an order temporarily suspending the 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.
Exceptional project recovery mechanism. Prior to the implementation of the PBR Framework, the PUC established the Major Project Interim Recovery (MPIR) adjustment mechanism and MPIR Guidelines. The MPIR mechanism provides the opportunity to recover revenues for net costs of approved eligible projects placed in service between general rate cases. In establishing the PBR Framework, the MPIR Guidelines were terminated and replaced with the EPRM Guidelines. Although the
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
MPIR Guidelines were terminated and replaced by the EPRM Guidelines, the MPIR mechanism continues within the PBR Framework to provide recovery of project costs previously approved for recovery under the MPIR. The established EPRM Guidelines permit the Utilities to include the full amount of approved costs in the EPRM for recovery in the first year the project goes into service, pro-rated for the portion of the year the project is in service. Deferred and other operation and maintenance (O&M) expense projects are also eligible for EPRM recovery under the EPRM Guidelines. EPRM recoverable costs are limited to the lesser of actual incurred project costs or the PUC-approved amounts, net of savings.
As of December 31, 2025, the Utilities annualized MPIR and EPRM revenue amounts totaled $35.7 million, including revenue taxes, for the Schofield Generating Station ($15.6 million), West Loch PV project ($3.1 million), Grid Modernization Strategy Phase 1 project ($14.1 million), Waiawa UFLS project ($0.1 million), Waena Switchyard/Synchronous project ($2.5 million) and Resilience project ($0.3 million) that included the return on project amount (based on approved amounts) in rate base, depreciation and/or incremental O&M expenses. The PUC approved the Utilities’ recovery of the annualized 2025 MPIR and EPRM revenues effective June 1, 2025 through the RBA rate adjustment.
As of December 31, 2025, the PUC approved the recovery of four EPRM projects in the amount of $227.5 million to the extent the project costs are not included in rates. Currently, the Utilities are seeking EPRM recovery for three additional projects subject to PUC approval.
Pilot process. As part of the PBR Framework, the PUC approved a pilot process to foster innovation by establishing an expedited implementation process for pilots that tests new technologies, programs, business models, and other arrangements (Pilot Process). Under the Pilot Process, the Utilities submit specific pilot proposals (i.e., pilot notices) that are within the scope of the approved Workplan to the PUC for their expedited review. The PUC will strive to issue an order addressing a proposed pilot within 45 days of the filing date of a pilot notice. If the PUC does not take affirmative action on a pilot notice by the end of the 45-day period, the pilot notice will be considered approved as submitted. The PUC may modify the pilot as originally proposed, and the Utilities will have 15 days to notify the PUC whether the Utilities accept the modification, propose further modification, or withdraw the pilot notice. The PUC may also, where necessary, suspend the pilot notice for further investigation.
The approved Pilot Process includes a cost recovery process that generally allows the Utilities to defer and recover total annual expenditures of approved pilot projects net of revenues, subject to an annual cap of $10 million, over 12 months beginning June 1 of the year following pilot implementation through the RBA rate adjustment, although the PUC may determine on a case-by-case basis that a particular project’s deferred costs should be amortized over a period greater than 12 months.
On March 24, 2025, the Utilities filed their annual Pilot Update report covering pilot projects that were active during 2024, including reporting on pilot projects that were initiated prior to the commencement of the Pilot Process. The pilot project costs including revenue taxes for the Utilities total approximately $1.3 million, $2.1 million and $3.0 million in 2025, 2024 and 2023, respectively. The 2025 pilot project costs will be included in the Utilities’ proposed adjustments to target revenue, which will be reflected in the 2026 spring revenue report filling.
On October 6, 2025, the PUC issued a decision approving the Utilities’ Wildfire Enhanced Fast Trip Reliability Mitigation Pilot, subject to certain reporting conditions. The purpose of the pilot is to test the ability of novel equipment and protection schemes to mitigate the negative reliability impacts caused by the implementation of Enhanced Fast Trip, while preserving the effectiveness of Enhanced Fast Trip in reducing wildfire ignition risk. The pilot commenced at the end of October 2025 with a planned duration of approximately 17 months.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Performance incentive mechanisms. The following PIMs and SSMs were approved by the PUC and are applicable to the 2024 and 2025 evaluation periods. PIMs and SSMs are determined at the end of their respective evaluation periods. Unless otherwise specified, the evaluation period is the 12‑month calendar year period ending December 31 over which measured performance is determined.
| | | | | | | | | | | | | | | | | | | | |
| Performance Incentive Mechanisms | Maximum rewards/penalties $ | 2025 rewards (penalties) accrued | | 2024 rewards (penalties) earned | | 2023 rewards (penalties) earned |
(in millions) | | | | | | |
| Transmission and Distribution-caused SAIDI/SAIFI PIMs | Maximum penalties of $3.6 million for 2024/2025 | $ | (3.0) | | | $ | (1.0) | | | $ | (3.7) | |
| Phase 1 RFP PIM | Varies | 0.3 | | | 0.2 | | | 0.1 | |
| Renewable portfolio standard (RPS) PIM | $10/MWh for above interpolated statutory RPS goal $20/MWh for failing to meet RPS targets in 2030, 2040 and 2045 | 1.9 | | | 1.9 | | | 0.4 | |
Interconnection Approval PIM1 | Maximum reward of $3.0 million or a total annual maximum penalty of $0.9 million | NA | | 2.4 | | | 3.0 | |
| Interconnection Requirements Study PIM | Varies | 3.8 | | | — | | | NA |
| Generation-caused SAIDI/SAIFI PIMs | Maximum penalties of approximately $1.0 million | — | | | (0.1) | | | NA |
| Collective Shared Savings Mechanism | 20% share of savings when non-ARA costs in a performance year lower than target year non-ARA costs | 4.3 | | | 2.8 | | | NA |
| Interim Grid Services | Maximum reward of 1.5 million | NA | | NA | | 1.1 | |
| Total PIM rewards, net | | $ | 7.5 | | | $ | 6.2 | | | $ | 0.9 | |
1 The Interconnection Approval PIM expired as of December 31, 2024.
NA - Not applicable
Note: Columns may not foot due to rounding.
On April 1, 2024, the Utilities filed a request for partial temporary suspension and modification of the T&D SAIDI and T&D SAIFI PIMs to specifically suspend the T&D SAIDI and T&D SAIFI PIMs for wildfire risk circuits from January 1, 2024 to December 31, 2025. The Utilities also proposed that circuits not identified as wildfire risk circuits would continue to be subject to the existing PIMs on a prorated basis. On December 18, 2024, and clarified on January 15, 2025, the PUC issued orders granting the Utilities’ request to suspend the T&D SAIDI and T&D SAIFI PIMs for wildfire risk circuits from January 1, 2024 to December 31, 2025. Separately, the Utilities submitted a request on December 16, 2025 to expand the suspension of T&D SAIDI and T&D SAIFI PIMs to all circuits and extend the suspension to December 31, 2026, to consider modifications to the T&D SAIDI and T&D SAIFI PIMs. On December 26, 2025, the PUC established a procedural schedule for the request. The PUC stated that while the Utilities’ request is pending, the PUC will extend the suspension that is currently in place beyond December 31, 2025, until the PUC issues an Order addressing the request.
For the 2025 evaluation period, the Utilities accrued $7.5 million (nil for Hawaiian Electric, $5.4 million for Hawaii Electric Light and $2.1 million for Maui Electric) in rewards net of penalties. The net rewards related to 2025 will be reflected in the 2026 PIMs annual report and 2026 spring revenue report filings with the exception of the Phase 1 RFP PIM which was reflected in the 2025 fall revenue report filing.
Annual review cycle. PBR D&O established an annual review cycle for revenue adjustments under the PBR Framework, including the biannual submission of the revenue reports. On December 12, 2025, the PUC approved the Utilities’ 2025 fall revenue report filed on October 31, 2025. The filing reflected ARA revenues for 2026 to be collected from January 1 through December 31, 2026, as follows: | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (in millions) | | Hawaiian Electric | | Hawaii Electric Light | | Maui Electric | | Total |
2026 ARA revenues | | $ | 20.4 | | | $ | 5.0 | | | $ | 4.9 | | | $ | 30.3 | |
| Management Audit savings commitment | | (4.6) | | | (1.0) | | | (1.0) | | | (6.6) | |
| | | | | | | | |
| | | | | | | | |
Net 2026 ARA revenues | | $ | 15.8 | | | $ | 4.0 | | | $ | 3.9 | | | $ | 23.7 | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The net incremental amounts between the 2025 spring and fall revenue reports are shown in the following table. The amounts are to be collected (refunded) from January 1, 2026 through December 31, 2026 under the RBA rate tariffs, which were included in the 2025 fall revenue report filing.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| (in millions) | | Hawaiian Electric | | Hawaii Electric Light | | Maui Electric | | Total |
2026 ARA revenues | | $ | 20.4 | | | $ | 5.0 | | | $ | 4.9 | | | $ | 30.3 | |
Annual change in accrued RBA balance through September 30, 2025 (and associated revenue taxes) | | (18.6) | | | (1.3) | | | (10.7) | | | (30.6) | |
Incremental Performance Incentive Mechanisms (net) | | — | | | (0.1) | | | 0.3 | | | 0.2 | |
| | | | | | | | |
| Net incremental amount to be collected under the RBA rate tariffs | | $ | 1.8 | | | $ | 3.6 | | | $ | (5.5) | | | $ | (0.1) | |
Note: Columns may not foot due to rounding.
Consolidating financial information. Consolidating financial information for Hawaiian Electric and its subsidiaries are presented for the years ended December 31, 2025, 2024 and 2023, and as of December 31, 2025 and 2024.
On March 21, 2024, Hawaiian Electric formed HE AR INTER LLC and its direct subsidiary, HE BRWR LLC, which were established to pursue financing through a secured asset-based (accounts receivable) credit facility.
Hawaiian Electric unconditionally guarantees Hawaii Electric Light’s and Maui Electric’s obligations (a) to the State of Hawaii for the repayment of principal and interest on Special Purpose Revenue Bonds issued for the benefit of Hawaii Electric Light and Maui Electric and (b) under their respective private placement note agreements and the Hawaii Electric Light notes and Maui Electric notes issued thereunder. Hawaiian Electric is also obligated, after the satisfaction of its obligations on its own preferred stock, to make dividend, redemption and liquidation payments on Hawaii Electric Light’s and Maui Electric’s preferred stock if the respective subsidiary is unable to make such payments.
Consolidating statement of income
Year ended December 31, 2025
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (in thousands) | Hawaiian Electric | | Hawaii Electric Light | | Maui Electric | | Other subsidiaries | | Consolidating adjustments | | | Hawaiian Electric Consolidated |
| Revenues | $ | 2,177,043 | | | 458,524 | | | 438,098 | | | 11,943 | | | (14,426) | | [1] | | $ | 3,071,182 | |
| Expenses | | | | | | | | | | | | |
| Fuel oil | 687,314 | | | 102,395 | | | 157,736 | | | — | | | — | | | | 947,445 | |
| Purchased power | 500,250 | | | 123,090 | | | 54,314 | | | — | | | — | | | | 677,654 | |
| Other operation and maintenance | 406,295 | | | 105,549 | | | 119,069 | | | 3,955 | | | (14,426) | | [1] | | 620,442 | |
| Depreciation | 170,255 | | | 44,971 | | | 40,813 | | | — | | | — | | | | 256,039 | |
| Taxes, other than income taxes | 206,127 | | | 42,763 | | | 40,926 | | | — | | | — | | | | 289,816 | |
| Total expenses | 1,970,241 | | | 418,768 | | | 412,858 | | | 3,955 | | | (14,426) | | | | 2,791,396 | |
Operating income | 206,802 | | | 39,756 | | | 25,240 | | | 7,988 | | | — | | | | 279,786 | |
| Allowance for equity funds used during construction | 11,140 | | | 1,551 | | | 2,322 | | | — | | | — | | | | 15,013 | |
| Equity in earnings of subsidiaries | 40,794 | | | — | | | — | | | — | | | (40,794) | | [2] | | — | |
| Retirement defined benefits credit (expense)—other than service costs | 3,570 | | | 663 | | | (98) | | | — | | | — | | | | 4,135 | |
| Interest expense and other charges, net | (71,933) | | | (11,186) | | | (15,639) | | | — | | | 5,056 | | [1] | | (93,702) | |
| Allowance for borrowed funds used during construction | 4,654 | | | 424 | | | 815 | | | — | | | — | | | | 5,893 | |
Interest income | 12,973 | | | 1,340 | | | 206 | | | — | | | (5,056) | | [1] | | 9,463 | |
Income before income taxes | 208,000 | | | 32,548 | | | 12,846 | | | 7,988 | | | (40,794) | | | | 220,588 | |
Income tax expense | 37,360 | | | 7,284 | | | 2,332 | | | 2,057 | | | — | | | | 49,033 | |
Net income | 170,640 | | | 25,264 | | | 10,514 | | | 5,931 | | | (40,794) | | | | 171,555 | |
Dividends on and loss on redemption of preferred stock of subsidiaries | — | | | 523 | | | 392 | | | — | | | — | | | | 915 | |
Net income attributable to Hawaiian Electric | 170,640 | | | 24,741 | | | 10,122 | | | 5,931 | | | (40,794) | | | | 170,640 | |
Dividends on and loss on redemption of preferred stock of Hawaiian Electric | 2,425 | | | — | | | — | | | — | | | — | | | | 2,425 | |
Net income for common stock | $ | 168,215 | | | 24,741 | | | 10,122 | | | 5,931 | | | (40,794) | | | | $ | 168,215 | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Consolidating statement of comprehensive income
Year ended December 31, 2025
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (in thousands) | Hawaiian Electric | | Hawaii Electric Light | | Maui Electric | | Other subsidiaries | | Consolidating
adjustments | | | Hawaiian Electric
Consolidated |
Net income for common stock | $ | 168,215 | | | 24,741 | | | 10,122 | | | 5,931 | | | (40,794) | | | | $ | 168,215 | |
Other comprehensive loss, net of taxes: | | | | | | | | | | | | |
| Retirement benefit plans: | | | | | | | | | | | | |
| Net gains arising during the period, net of taxes | 76,455 | | | 10,593 | | | 10,338 | | | — | | | (20,931) | | [1] | | 76,455 | |
Adjustment for amortization of net gains recognized during the period in net periodic benefit cost, net of taxes | (2,182) | | | (114) | | | (251) | | | — | | | 365 | | [1] | | (2,182) | |
| Reclassification adjustment for impact of D&Os of the PUC included in regulatory assets, net of taxes | (74,419) | | | (10,486) | | | (10,097) | | | — | | | 20,583 | | [1] | | (74,419) | |
Other comprehensive loss, net of taxes | (146) | | | (7) | | | (10) | | | — | | | 17 | | | | (146) | |
Comprehensive income attributable to common shareholder | $ | 168,069 | | | 24,734 | | | 10,112 | | | 5,931 | | | (40,777) | | | | $ | 168,069 | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Consolidating statement of income
Year ended December 31, 2024
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (in thousands) | Hawaiian Electric | | Hawaii Electric Light | | Maui Electric | | Other subsidiaries | | Consolidating adjustments | | | Hawaiian Electric Consolidated |
| Revenues | $ | 2,283,148 | | | 483,715 | | | 440,432 | | | 5,570 | | | (6,165) | | [1] | | $ | 3,206,700 | |
| Expenses | | | | | | | | | | | | |
| Fuel oil | 790,004 | | | 121,719 | | | 166,322 | | | — | | | — | | | | 1,078,045 | |
| Purchased power | 517,583 | | | 132,086 | | | 53,702 | | | — | | | — | | | | 703,371 | |
| Other operation and maintenance | 390,111 | | | 102,883 | | | 121,693 | | | 1,150 | | | (6,165) | | [1] | | 609,672 | |
Wildfire tort-related claims | 1,500,000 | | | 187,500 | | | 187,500 | | | — | | | — | | | | 1,875,000 | |
| Depreciation | 167,909 | | | 43,855 | | | 39,378 | | | — | | | — | | | | 251,142 | |
| Taxes, other than income taxes | 215,137 | | | 45,025 | | | 41,166 | | | — | | | — | | | | 301,328 | |
| Total expenses | 3,580,744 | | | 633,068 | | | 609,761 | | | 1,150 | | | (6,165) | | | | 4,818,558 | |
Operating income (loss) | (1,297,596) | | | (149,353) | | | (169,329) | | | 4,420 | | | — | | | | (1,611,858) | |
Allowance for equity funds used during construction | 10,853 | | | 1,189 | | | 1,744 | | | — | | | — | | | | 13,786 | |
| Equity in earnings of subsidiaries | (248,004) | | | — | | | — | | | — | | | 248,004 | | [2] | | — | |
| Retirement defined benefits credit (expense)—other than service costs | 3,574 | | | 665 | | | (102) | | | — | | | — | | | | 4,137 | |
| Interest expense and other charges, net | (59,906) | | | (11,422) | | | (16,688) | | | — | | | 5,934 | | [1] | | (82,082) | |
| Allowance for borrowed funds used during construction | 4,300 | | | 355 | | | 815 | | | — | | | — | | | | 5,470 | |
Interest income | 11,136 | | | 1,062 | | | 369 | | | | | (5,934) | | [1] | | 6,633 | |
| Income (loss) before income taxes | (1,575,643) | | | (157,504) | | | (183,191) | | | 4,420 | | | 248,004 | | | | (1,663,914) | |
| Income tax expense (benefit) | (350,361) | | | (41,624) | | | (48,700) | | | 1,138 | | | — | | | | (439,547) | |
Net income (loss) | (1,225,282) | | | (115,880) | | | (134,491) | | | 3,282 | | | 248,004 | | | | (1,224,367) | |
| Preferred stock dividends of subsidiaries | — | | | 534 | | | 381 | | | — | | | — | | | | 915 | |
| Net income (loss) attributable to Hawaiian Electric | (1,225,282) | | | (116,414) | | | (134,872) | | | 3,282 | | | 248,004 | | | | (1,225,282) | |
| Preferred stock dividends of Hawaiian Electric | 1,080 | | | — | | | — | | | — | | | — | | | | 1,080 | |
| Net income (loss) for common stock | $ | (1,226,362) | | | (116,414) | | | (134,872) | | | 3,282 | | | 248,004 | | | | $ | (1,226,362) | |
Consolidating statement of comprehensive income
Year ended December 31, 2024
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (in thousands) | Hawaiian Electric | | Hawaii Electric Light | | Maui Electric | | Other subsidiaries | | Consolidating adjustments | | | Hawaiian Electric
Consolidated |
Net income (loss) for common stock | $ | (1,226,362) | | | (116,414) | | | (134,872) | | | 3,282 | | | 248,004 | | | | $ | (1,226,362) | |
Other comprehensive income (loss), net of taxes: | | | | | | | | | | | | |
| Retirement benefit plans: | | | | | | | | | | | | |
Net gains arising during the period, net of taxes | 65,680 | | | 8,108 | | | 7,342 | | | — | | | (15,450) | | [1] | | 65,680 | |
Adjustment for amortization of net gains recognized during the period in net periodic benefit cost, net of taxes | (2,035) | | | (159) | | | (243) | | | — | | | 402 | | [1] | | (2,035) | |
Reclassification adjustment for impact of D&Os of the PUC included in regulatory assets, net of taxes | (63,708) | | | (7,895) | | | (7,076) | | | — | | | 14,971 | | [1] | | (63,708) | |
Other comprehensive income (loss), net of taxes | (63) | | | 54 | | | 23 | | | — | | | (77) | | | | (63) | |
Comprehensive income (loss) attributable to common shareholder | $ | (1,226,425) | | | (116,360) | | | (134,849) | | | 3,282 | | | 247,927 | | | | $ | (1,226,425) | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Consolidating statement of income
Year ended December 31, 2023
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (in thousands) | Hawaiian Electric | | Hawaii Electric Light | | Maui Electric | | | | Consolidating adjustments | | | Hawaiian Electric Consolidated |
| Revenues | $ | 2,356,478 | | | 464,161 | | | 448,882 | | | | | — | | | | $ | 3,269,521 | |
| Expenses | | | | | | | | | | | | |
| Fuel oil | 913,801 | | | 105,009 | | | 192,610 | | | | | — | | | | 1,211,420 | |
| Purchased power | 486,067 | | | 142,837 | | | 42,865 | | | | | — | | | | 671,769 | |
| Other operation and maintenance | 343,462 | | | 85,261 | | | 104,834 | | | | | — | | | | 533,557 | |
| Depreciation | 164,150 | | | 42,541 | | | 37,014 | | | | | — | | | | 243,705 | |
| Taxes, other than income taxes | 221,664 | | | 43,095 | | | 42,153 | | | | | — | | | | 306,912 | |
| Total expenses | 2,129,144 | | | 418,743 | | | 419,476 | | | | | — | | | | 2,967,363 | |
| Operating income | 227,334 | | | 45,418 | | | 29,406 | | | | | — | | | | 302,158 | |
Allowance for equity funds used during construction | 11,721 | | | 1,411 | | | 2,032 | | | | | — | | | | 15,164 | |
| Equity in earnings of subsidiaries | 44,809 | | | — | | | — | | | | | (44,809) | | [2] | | — | |
| Retirement defined benefits credit (expense)—other than service costs | 3,735 | | | 667 | | | (99) | | | | | — | | | | 4,303 | |
| Interest expense and other charges, net | (62,362) | | | (11,650) | | | (12,933) | | | | | 805 | | [1] | | (86,140) | |
Allowance for borrowed funds used during construction | 4,081 | | | 451 | | | 669 | | | | | — | | | | 5,201 | |
Interest income | 5,113 | | | 1,071 | | | 1,075 | | | | | (805) | | [1] | | 6,454 | |
| Income before income taxes | 234,431 | | | 37,368 | | | 20,150 | | | | | (44,809) | | | | 247,140 | |
| Income taxes | 39,399 | | | 8,327 | | | 3,467 | | | | | — | | | | 51,193 | |
| Net income | 195,032 | | | 29,041 | | | 16,683 | | | | | (44,809) | | | | 195,947 | |
| Preferred stock dividends of subsidiaries | — | | | 534 | | | 381 | | | | | — | | | | 915 | |
Net income attributable to Hawaiian Electric | 195,032 | | | 28,507 | | | 16,302 | | | | | (44,809) | | | | 195,032 | |
| Preferred stock dividends of Hawaiian Electric | 1,080 | | | — | | | — | | | | | — | | | | 1,080 | |
| Net income for common stock | $ | 193,952 | | | 28,507 | | | 16,302 | | | | | (44,809) | | | | $ | 193,952 | |
Consolidating statement of comprehensive income
Year ended December 31, 2023
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (in thousands) | Hawaiian Electric | | Hawaii Electric Light | | Maui Electric | | | | Consolidating adjustments | | | Hawaiian Electric
Consolidated |
| Net income for common stock | $ | 193,952 | | | 28,507 | | | 16,302 | | | | | (44,809) | | | | $ | 193,952 | |
Other comprehensive income (loss), net of taxes: | | | | | | | | | | | | |
| Retirement benefit plans: | | | | | | | | | | | | |
Net gains arising during the period, net of taxes | 10,175 | | | 961 | | | 1,275 | | | | | (2,236) | | [1] | | 10,175 | |
Adjustment for amortization of prior service credit and net gains recognized during the period in net periodic benefit cost, net of taxes | (1,983) | | | (221) | | | (266) | | | | | 487 | | [1] | | (1,983) | |
Reclassification adjustment for impact of D&Os of the PUC included in regulatory assets, net of taxes | (8,204) | | | (752) | | | (978) | | | | | 1,730 | | [1] | | (8,204) | |
Other comprehensive income (loss), net of taxes | (12) | | | (12) | | | 31 | | | | | (19) | | | | (12) | |
Comprehensive income attributable to common shareholder | $ | 193,940 | | | 28,495 | | | 16,333 | | | | | (44,828) | | | | $ | 193,940 | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Consolidating balance sheet
December 31, 2025
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (in thousands) | Hawaiian Electric | | Hawaii Electric Light | | Maui Electric | | Other subsidiaries | | Consolidating
adjustments | | | Hawaiian Electric
Consolidated |
| Assets | | | | | | | | | | | | |
| Property, plant and equipment | | | | | | | | | | | | |
| Utility property, plant and equipment | | | | | | | | | | | | |
| Land | $ | 42,860 | | | 5,644 | | | 3,603 | | | — | | | — | | | | $ | 52,107 | |
| Plant and equipment | 5,667,936 | | | 1,564,628 | | | 1,487,053 | | | — | | | — | | | | 8,719,617 | |
| Right-of-use assets - finance lease | 411,545 | | | 77,183 | | | 50,757 | | | — | | | — | | | | 539,485 | |
| Less accumulated depreciation | (2,165,110) | | | (716,715) | | | (626,767) | | | — | | | — | | | | (3,508,592) | |
| Construction in progress | 283,687 | | | 34,021 | | | 64,439 | | | — | | | — | | | | 382,147 | |
| Utility property, plant and equipment, net | 4,240,918 | | | 964,761 | | | 979,085 | | | — | | | — | | | | 6,184,764 | |
| Nonutility property, plant and equipment, less accumulated depreciation | 1,146 | | | 115 | | | 1,444 | | | — | | | — | | | | 2,705 | |
| Total property, plant and equipment, net | 4,242,064 | | | 964,876 | | | 980,529 | | | — | | | — | | | | 6,187,469 | |
Investment in wholly owned subsidiaries, at equity | 734,296 | | | — | | | — | | | — | | | (734,296) | | [2] | | — | |
| Current assets | | | | | | | | | | | | |
| Cash and cash equivalents | 396,215 | | | 56,563 | | | 8,572 | | | 24,870 | | | — | | | | 486,220 | |
| Customer accounts receivable, net | 7,278 | | | 2,987 | | | 3,942 | | | 158,687 | | | — | | | | 172,894 | |
| Accrued unbilled revenues, net | 24,826 | | | 7,462 | | | 600 | | | 159,145 | | | — | | | | 192,033 | |
| Other accounts receivable, net | 196,783 | | | 55,970 | | | 50,838 | | | — | | | (227,245) | | [1] | | 76,346 | |
| Fuel oil stock, at average cost | 84,938 | | | 11,997 | | | 16,647 | | | — | | | — | | | | 113,582 | |
| Materials and supplies, at average cost | 75,754 | | | 19,184 | | | 37,865 | | | — | | | — | | | | 132,803 | |
| Prepayments and other | 38,321 | | | 9,657 | | | 12,451 | | | — | | | (2,449) | | [1] | | 57,980 | |
| Regulatory assets | 32,461 | | | 10,279 | | | 7,299 | | | — | | | — | | | | 50,039 | |
| Total current assets | 856,576 | | | 174,099 | | | 138,214 | | | 342,702 | | | (229,694) | | | | 1,281,897 | |
| Other long-term assets | | | | | | | | | | | | |
| Operating lease right-of-use assets | 34,743 | | | 16,219 | | | 4,901 | | | — | | | — | | | | 55,863 | |
| Regulatory assets | 177,678 | | | 28,245 | | | 52,153 | | | — | | | — | | | | 258,076 | |
| Defined benefit pension and other postretirement benefit plans asset | 134,785 | | | 45,794 | | | 38,898 | | | — | | | — | | | | 219,477 | |
Investment in unconsolidated affiliate | 287,250 | | | — | | | — | | | — | | | — | | | | 287,250 | |
| Other | 344,052 | | | 18,374 | | | 28,976 | | | — | | | (150,914) | | [1] | | 240,488 | |
| Total other long-term assets | 978,508 | | | 108,632 | | | 124,928 | | | — | | | (150,914) | | | | 1,061,154 | |
| Total assets | $ | 6,811,444 | | | 1,247,607 | | | 1,243,671 | | | 342,702 | | | (1,114,904) | | | | $ | 8,530,520 | |
(continued)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Consolidating balance sheet (continued)
December 31, 2025
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (in thousands) | Hawaiian Electric | | Hawaii Electric Light | | Maui Electric | | Other subsidiaries | | Consolidating
adjustments | | | Hawaiian Electric
Consolidated |
| Capitalization and liabilities | | | | | | | | | | | | |
| Capitalization | | | | | | | | | | | | |
| Common stock equity | $ | 1,583,399 | | | 276,332 | | | 298,459 | | | 159,505 | | | (734,296) | | [2] | | $ | 1,583,399 | |
| Long-term debt, net | 1,619,482 | | | 261,614 | | | 291,778 | | | — | | | (115,000) | | [1] | | 2,057,874 | |
| Total capitalization | 3,202,881 | | | 537,946 | | | 590,237 | | | 159,505 | | | (849,296) | | | | 3,641,273 | |
| Current liabilities | | | | | | | | | | | | |
| Current portion of operating lease liabilities | 5,716 | | | 8,570 | | | 3,279 | | | — | | | — | | | | 17,565 | |
| Current portion of long-term debt, net | 61,980 | | | 7,997 | | | 54,982 | | | — | | | — | | | | 124,959 | |
| Accounts payable | 150,843 | | | 34,072 | | | 32,288 | | | — | | | — | | | | 217,203 | |
| Interest and preferred dividends payable | 22,582 | | | 3,440 | | | 3,114 | | | — | | | (1,112) | | [1] | | 28,024 | |
| Taxes accrued, including revenue taxes | 184,339 | | | 40,720 | | | 37,374 | | | 3,195 | | | (2,449) | | [1] | | 263,179 | |
| Regulatory liabilities | 23,127 | | | 12,410 | | | 16,460 | | | — | | | — | | | | 51,997 | |
Wildfire tort-related claims | 386,500 | | | 47,875 | | | 47,875 | | | — | | | — | | | | 482,250 | |
| Other | 93,475 | | | 37,759 | | | 34,175 | | | 180,002 | | | (226,133) | | [1] | | 119,278 | |
| Total current liabilities | 928,562 | | | 192,843 | | | 229,547 | | | 183,197 | | | (229,694) | | | | 1,304,455 | |
| Deferred credits and other liabilities | | | | | | | | | | | | |
| Operating lease liabilities | 32,974 | | | 7,932 | | | 1,847 | | | — | | | — | | | | 42,753 | |
| Finance lease liabilities | 382,227 | | | 74,087 | | | 49,276 | | | — | | | — | | | | 505,590 | |
| Deferred income taxes | — | | | 12,089 | | | 23,825 | | | — | | | (35,914) | | [1] | | — | |
| Regulatory liabilities | 980,131 | | | 248,885 | | | 163,131 | | | — | | | — | | | | 1,392,147 | |
| Unamortized tax credits | 47,973 | | | 9,794 | | | 10,151 | | | — | | | — | | | | 67,918 | |
| Defined benefit pension plan liability | 6,788 | | | 121 | | | — | | | — | | | — | | | | 6,909 | |
Wildfire tort-related claims | 1,149,000 | | | 143,625 | | | 143,625 | | | — | | | — | | | | 1,436,250 | |
| Other | 80,908 | | | 20,285 | | | 32,032 | | | — | | | — | | | | 133,225 | |
| Total deferred credits and other liabilities | 2,680,001 | | | 516,818 | | | 423,887 | | | — | | | (35,914) | | | | 3,584,792 | |
| Total capitalization and liabilities | $ | 6,811,444 | | | 1,247,607 | | | 1,243,671 | | | 342,702 | | | (1,114,904) | | | | $ | 8,530,520 | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Consolidating balance sheet
December 31, 2024
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (in thousands) | Hawaiian Electric | | Hawaii Electric Light | | Maui Electric | | Other subsidiaries | | Consolidating
adjustments | | | Hawaiian Electric
Consolidated |
| Assets | | | | | | | | | | | | |
| Property, plant and equipment | | | | | | | | | | | | |
| Utility property, plant and equipment | | | | | | | | | | | | |
| Land | $ | 42,860 | | | 5,645 | | | 3,514 | | | — | | | — | | | | $ | 52,019 | |
| Plant and equipment | 5,502,198 | | | 1,501,947 | | | 1,417,356 | | | — | | | — | | | | 8,421,501 | |
Right-of-use assets - finance lease | 360,270 | | | 36,074 | | | 50,757 | | | — | | | — | | | | 447,101 | |
| Less accumulated depreciation | (2,029,719) | | | (691,161) | | | (605,744) | | | — | | | — | | | | (3,326,624) | |
| Construction in progress | 282,150 | | | 31,341 | | | 52,218 | | | — | | | — | | | | 365,709 | |
| Utility property, plant and equipment, net | 4,157,759 | | | 883,846 | | | 918,101 | | | — | | | — | | | | 5,959,706 | |
Nonutility property, plant and equipment, less accumulated depreciation | 1,145 | | | 115 | | | 1,532 | | | — | | | — | | | | 2,792 | |
| Total property, plant and equipment, net | 4,158,904 | | | 883,961 | | | 919,633 | | | — | | | — | | | | 5,962,498 | |
Investment in wholly owned subsidiaries, at equity | 680,414 | | | — | | | — | | | — | | | (680,414) | | [2] | | — | |
| Current assets | | | | | | | | | | | | |
| Cash and cash equivalents | 118,367 | | | 31,534 | | | 16,456 | | | 17,791 | | | — | | | | 184,148 | |
| Advances to affiliates | 62,200 | | | — | | | — | | | — | | | (62,200) | | [1] | | — | |
Customer accounts receivable, net | 19,050 | | | 7,245 | | | 8,941 | | | 164,662 | | | — | | | | 199,898 | |
| Accrued unbilled revenues, net | 12,738 | | | 4,046 | | | 1,890 | | | 160,047 | | | — | | | | 178,721 | |
| Other accounts receivable, net | 209,752 | | | 58,366 | | | 51,465 | | | — | | | (249,946) | | [1] | | 69,637 | |
| Fuel oil stock, at average cost | 70,800 | | | 13,764 | | | 14,339 | | | — | | | — | | | | 98,903 | |
Materials and supplies, at average cost | 69,602 | | | 15,506 | | | 33,358 | | | — | | | — | | | | 118,466 | |
| Prepayments and other | 110,516 | | | 16,662 | | | 30,747 | | | — | | | (6,705) | | [1] | | 151,220 | |
| Regulatory assets | 36,520 | | | 8,211 | | | 9,164 | | | — | | | — | | | | 53,895 | |
| Total current assets | 709,545 | | | 155,334 | | | 166,360 | | | 342,500 | | | (318,851) | | | | 1,054,888 | |
| Other long-term assets | | | | | | | | | | | | |
| Operating lease right-of-use assets | 29,868 | | | 22,672 | | | 6,741 | | | — | | | — | | | | 59,281 | |
| Regulatory assets | 172,257 | | | 18,875 | | | 36,292 | | | — | | | — | | | | 227,424 | |
| Defined benefit pension and other postretirement benefit plans asset | 66,292 | | | 30,397 | | | 24,128 | | | — | | | (11,998) | | [1] | | 108,819 | |
| Other | 194,006 | | | 18,612 | | | 21,702 | | | — | | | (33,626) | | [1] | | 200,694 | |
| Total other long-term assets | 462,423 | | | 90,556 | | | 88,863 | | | — | | | (45,624) | | | | 596,218 | |
Total assets | $ | 6,011,286 | | | 1,129,851 | | | 1,174,856 | | | 342,500 | | | (1,044,889) | | | | $ | 7,613,604 | |
(continued)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Consolidating balance sheet (continued)
December 31, 2024
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (in thousands) | Hawaiian Electric | | Hawaii Electric Light | | Maui Electric | | Other subsidiaries | | Consolidating
adjustments | | | Hawaiian Electric
Consolidated |
| Capitalization and liabilities | | | | | | | | | | | | |
| Capitalization | | | | | | | | | | | | |
| Common stock equity | $ | 1,156,955 | | | 243,964 | | | 282,876 | | | 153,574 | | | (680,414) | | [2] | | $ | 1,156,955 | |
Cumulative preferred stock–not subject to mandatory redemption | 22,293 | | | 7,000 | | | 5,000 | | | — | | | — | | | | 34,293 | |
| Long-term debt, net | 1,353,173 | | | 244,466 | | | 256,575 | | | — | | | — | | | | 1,854,214 | |
| Total capitalization | 2,532,421 | | | 495,430 | | | 544,451 | | | 153,574 | | | (680,414) | | | | 3,045,462 | |
| Current liabilities | | | | | | | | | | | | |
| Current portion of operating lease liabilities | 4,430 | | | 7,802 | | | 2,970 | | | — | | | — | | | | 15,202 | |
| Current portion of long-term debt, net | 40,000 | | | 5,000 | | | 2,000 | | | — | | | — | | | | 47,000 | |
| Short-term borrowings-non-affiliate | 48,623 | | | — | | | — | | | — | | | — | | | | 48,623 | |
| Short-term borrowings-affiliate | — | | | — | | | 62,200 | | | — | | | (62,200) | | [1] | | — | |
| Accounts payable | 137,837 | | | 27,077 | | | 32,066 | | | — | | | — | | | | 196,980 | |
Interest and preferred dividends payable | 15,994 | | | 3,191 | | | 2,701 | | | — | | | (350) | | [1] | | 21,536 | |
| Taxes accrued, including revenue taxes | 197,768 | | | 42,692 | | | 37,108 | | | 1,138 | | | (6,705) | | [1] | | 272,001 | |
| Regulatory liabilities | 11,701 | | | 10,039 | | | 4,828 | | | — | | | — | | | | 26,568 | |
Wildfire tort-related claims | 383,000 | | | 47,875 | | | 47,875 | | | — | | | — | | | | 478,750 | |
| Other | 103,415 | | | 35,492 | | | 43,913 | | | 187,788 | | | (249,597) | | [1] | | 121,011 | |
| Total current liabilities | 942,768 | | | 179,168 | | | 235,661 | | | 188,926 | | | (318,852) | | | | 1,227,671 | |
| Deferred credits and other liabilities | | | | | | | | | | | | |
| Operating lease liabilities | 29,830 | | | 15,230 | | | 4,075 | | | — | | | — | | | | 49,135 | |
| Finance lease liabilities | 341,364 | | | 34,370 | | | 49,891 | | | — | | | — | | | | 425,625 | |
| Deferred income taxes | — | | | 5,368 | | | 28,257 | | | — | | | (33,625) | | [1] | | — | |
| Regulatory liabilities | 864,259 | | | 222,834 | | | 130,422 | | | — | | | — | | | | 1,217,515 | |
| Unamortized tax credits | 54,950 | | | 10,757 | | | 10,969 | | | — | | | — | | | | 76,676 | |
Wildfire tort-related claims | 1,149,000 | | | 143,625 | | | 143,625 | | | — | | | — | | | | 1,436,250 | |
| Defined benefit pension plan liability | 18,301 | | | 125 | | | — | | | — | | | (11,998) | | [1] | | 6,428 | |
| Other | 78,393 | | | 22,944 | | | 27,505 | | | — | | | — | | | | 128,842 | |
Total deferred credits and other liabilities | 2,536,097 | | | 455,253 | | | 394,744 | | | — | | | (45,623) | | | | 3,340,471 | |
| Total capitalization and liabilities | $ | 6,011,286 | | | 1,129,851 | | | 1,174,856 | | | 342,500 | | | (1,044,889) | | | | $ | 7,613,604 | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Consolidating statements of changes in common stock equity
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (in thousands) | Hawaiian Electric | | Hawaii Electric Light | | Maui Electric | | Other subsidiaries | | Consolidating
adjustments | | Hawaiian Electric
Consolidated |
| Balance, December 31, 2022 | $ | 2,344,170 | | | 344,720 | | | 357,036 | | | 77 | | | (701,833) | | | $ | 2,344,170 | |
| Net income for common stock | 193,952 | | | 28,507 | | | 16,302 | | | — | | | (44,809) | | | 193,952 | |
| Other comprehensive income (loss), net of taxes | (12) | | | (12) | | | 31 | | | — | | | (19) | | | (12) | |
| Common stock dividends | (129,000) | | | (13,425) | | | (11,025) | | | — | | | 24,450 | | | (129,000) | |
| Balance, December 31, 2023 | 2,409,110 | | | 359,790 | | | 362,344 | | | 77 | | | (722,211) | | | 2,409,110 | |
| Net income (loss) for common stock | (1,226,362) | | | (116,414) | | | (134,872) | | | 3,282 | | | 248,004 | | | (1,226,362) | |
Other comprehensive income (loss), net of taxes | (63) | | | 54 | | | 23 | | | — | | | (77) | | | (63) | |
Issuance of common stock, net of expenses | — | | | — | | | 55,000 | | | 150,215 | | | (205,215) | | | — | |
| Common stock dividends | (26,000) | | | — | | | — | | | — | | | — | | | (26,000) | |
Additional paid-in capital | 270 | | | 534 | | | 381 | | | — | | | (915) | | | 270 | |
| Balance, December 31, 2024 | 1,156,955 | | | 243,964 | | | 282,876 | | | 153,574 | | | (680,414) | | | 1,156,955 | |
Net income for common stock | 168,215 | | | 24,741 | | | 10,122 | | | 5,931 | | | (40,794) | | | 168,215 | |
Other comprehensive loss, net of tax benefits | (146) | | | (7) | | | (10) | | | — | | | 17 | | | (146) | |
| Common stock dividends | (30,000) | | | — | | | — | | | — | | | — | | | (30,000) | |
Stock expense adjustment and other | 585 | | | 100 | | | 90 | | | — | | | (190) | | | 585 | |
Additional paid-in capital | 287,790 | | | 7,534 | | | 5,381 | | | — | | | (12,915) | | | 287,790 | |
| Balance, December 31, 2025 | $ | 1,583,399 | | | 276,332 | | | 298,459 | | | 159,505 | | | (734,296) | | | $ | 1,583,399 | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Consolidating statement of cash flows
Year ended December 31, 2025
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (in thousands) | Hawaiian Electric | | Hawaii Electric Light | | Maui Electric | | Other subsidiaries | | Consolidating
adjustments | | | Hawaiian Electric
Consolidated |
| Cash flows from operating activities | | | | | | | | | | | | |
Net income | $ | 170,640 | | | 25,264 | | | 10,514 | | | 5,931 | | | (40,794) | | [2] | | $ | 171,555 | |
| Adjustments to reconcile net income to net cash provided by operating activities | | | | | | | | | | | | |
| Equity in earnings of subsidiaries | (40,794) | | | — | | | — | | | — | | | 40,794 | | [2] | | — | |
| Depreciation of property, plant and equipment | 170,255 | | | 44,971 | | | 40,813 | | | — | | | — | | | | 256,039 | |
| Other amortization | 30,603 | | | 4,535 | | | 3,028 | | | — | | | — | | | | 38,166 | |
Deferred income tax expense (benefit) | (13,687) | | | 5,369 | | | 2,076 | | | — | | | — | | | | (6,242) | |
Gain/Loss on sale of receivables to affiliate | 8,723 | | | 1,644 | | | 1,576 | | | (11,943) | | | — | | | | — | |
| State refundable credit | (8,178) | | | (1,925) | | | (2,283) | | | — | | | — | | | | (12,386) | |
| Bad debt expense | 1,513 | | | 455 | | | 1,573 | | | — | | | — | | | | 3,541 | |
| Allowance for equity funds used during construction | (11,140) | | | (1,551) | | | (2,322) | | | — | | | — | | | | (15,013) | |
| Other | 2,380 | | | 443 | | | (171) | | | — | | | — | | | | 2,652 | |
| Changes in assets and liabilities: | | | | | | | | | | | | |
Decrease in accounts receivable | 11,333 | | | 2,239 | | | 683 | | | 17,922 | | | (22,696) | | [1] | | 9,481 | |
Decrease (increase) in accrued unbilled revenues | (12,001) | | | (3,396) | | | 1,246 | | | 897 | | | — | | | | (13,254) | |
Decrease (increase) in fuel oil stock | (14,138) | | | 1,767 | | | (2,308) | | | — | | | — | | | | (14,679) | |
Increase in materials and supplies | (6,152) | | | (3,678) | | | (4,507) | | | — | | | — | | | | (14,337) | |
Increase in regulatory assets | (12,652) | | | (8,988) | | | (8,822) | | | — | | | — | | | | (30,462) | |
Increase in regulatory liabilities | 57,612 | | | 8,935 | | | 29,496 | | | — | | | — | | | | 96,043 | |
Increase in accounts payable | 4,942 | | | 3,598 | | | 179 | | | — | | | — | | | | 8,719 | |
| Change in prepaid and accrued income taxes, tax credits and revenue taxes | (8,530) | | | (2,024) | | | 2,603 | | | 2,057 | | | — | | | | (5,894) | |
Change in defined benefit pension and other postretirement benefit plans asset/liability | (6,835) | | | (1,051) | | | (891) | | | — | | | — | | | | (8,777) | |
| Change in other assets and liabilities | (25,885) | | | (1,251) | | | (15,841) | | | (7,785) | | | 22,696 | | [1] | | (28,066) | |
Net cash provided by operating activities | 298,009 | | | 75,356 | | | 56,642 | | | 7,079 | | | — | | | | 437,086 | |
| Cash flows from investing activities | | | | | | | | | | | | |
| Capital expenditures | (171,844) | | | (75,378) | | | (92,351) | | | — | | | — | | | | (339,573) | |
Advances from affiliates | 62,200 | | | — | | | — | | | — | | | (62,200) | | [1] | | — | |
| Other | (7,960) | | | 1,093 | | | 1,009 | | | — | | | 12,000 | | [1][2] | | 6,142 | |
| Net cash used in investing activities | (117,604) | | | (74,285) | | | (91,342) | | | — | | | (50,200) | | | | (333,431) | |
| Cash flows from financing activities | | | | | | | | | | | | |
| Common stock dividends | (30,000) | | | — | | | — | | | — | | | — | |
| | (30,000) | |
| Preferred stock dividends of Hawaiian Electric and subsidiaries | (1,995) | | | — | | | — | | | — | | | — | | | | (1,995) | |
Proceeds from issuance of common stock/capital contribution from parent | 540 | | | — | | | — | | | — | | | — | | | | 540 | |
Proceeds from issuance of long-term debt | 500,000 | | | — | | | — | | | — | | | — | | | | 500,000 | |
Repayment of long-term debt and funds transferred for repayment of long-term debt | (166,000) | | | — | | | — | | | — | | | — | | | | (166,000) | |
Net decrease in short-term borrowings from non-affiliates and affiliate with original maturities of three months or less | — | | | — | | | (62,200) | | | — | | | 62,200 | | [1] | | — | |
| Payments of obligations under finance leases | (8,423) | | | (886) | | | (596) | | | — | | | — | | | | (9,905) | |
| Repayment of short-term debt | (50,000) | | | — | | | — | | | — | | | — | | | | (50,000) | |
Issuance of note receivables to affiliates | (115,000) | | | — | | | — | | | — | | | 115,000 | | [1] | | — | |
Proceeds from issuance of long-term debt from affiliate | — | | | 25,000 | | | 90,000 | | | — | | | (115,000) | | [1] | | — | |
Capital contribution | — | | | 7,000 | | | 5,000 | | | — | | | (12,000) | | [2] | | — | |
Redemption of preferred stock | (23,468) | | | (7,000) | | | (5,000) | | | — | | | — | | | | (35,468) | |
| Other | (8,211) | | | (156) | | | (388) | | | — | | | — | | | | (8,755) | |
Net cash provided by financing activities | 97,443 | | | 23,958 | | | 26,816 | | | — | | | 50,200 | | | | 198,417 | |
Net increase (decrease) in cash and cash equivalents | 277,848 | | | 25,029 | | | (7,884) | | | 7,079 | | | — | | | | 302,072 | |
Cash and cash equivalents, January 1 | 118,367 | | | 31,534 | | | 16,456 | | | 17,791 | | | — | | | | 184,148 | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| Cash and cash equivalents, December 31 | $ | 396,215 | | | 56,563 | | | 8,572 | | | 24,870 | | | — | | | | $ | 486,220 | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Consolidating statement of cash flows
Year ended December 31, 2024
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (in thousands) | Hawaiian Electric | | Hawaii Electric Light | | Maui Electric | | Other subsidiaries | | Consolidating
adjustments | | | Hawaiian Electric
Consolidated |
| Cash flows from operating activities | | | | | | | | | | | | |
Net income (loss) | $ | (1,225,282) | | | (115,880) | | | (134,491) | | | 3,282 | | | 248,004 | | [2] | | $ | (1,224,367) | |
Adjustments to reconcile net income (loss) to net cash provided by operating activities | | | | | | | | | | | | |
Equity in earnings of subsidiaries | 248,004 | | | — | | | — | | | — | | | (248,004) | | [2] | | — | |
Depreciation of property, plant and equipment | 167,909 | | | 43,855 | | | 39,378 | | | — | | | — | | | | 251,142 | |
| Other amortization | 23,606 | | | 4,958 | | | 3,264 | | | — | | | — | | | | 31,828 | |
| Deferred income tax benefit | (393,025) | | | (47,550) | | | (41,049) | | | — | | | — | | | | (481,624) | |
State refundable credit | (7,914) | | | (1,848) | | | (2,152) | | | — | | | — | | | | (11,914) | |
| Bad debt expense | 2,838 | | | 476 | | | 1,406 | | | — | | | — | | | | 4,720 | |
Allowance for equity funds used during construction | (10,853) | | | (1,189) | | | (1,744) | | | — | | | — | | | | (13,786) | |
Gain/Loss on sale of receivables to affiliate | 4,079 | | | 821 | | | 670 | | | (5,570) | | | — | | | | — | |
Other | (6,270) | | | (50) | | | 9 | | | — | | | — | | | | (6,311) | |
| Changes in assets and liabilities: | | | | | | | | | | | | |
| Decrease (increase) in accounts receivable | 22,897 | | | (13,175) | | | 1,570 | | | (95,382) | | | 172,466 | | [1] | | 88,376 | |
Decrease (increase) in accrued unbilled revenues | 57,281 | | | 20,989 | | | 22,633 | | | (93,342) | | | — | | | | 7,561 | |
Decrease in fuel oil stock | 37,427 | | | 4,205 | | | 7,702 | | | — | | | — | | | | 49,334 | |
| Decrease (increase) in materials and supplies | (5,269) | | | (1,109) | | | 2,345 | | | — | | | — | | | | (4,033) | |
| Increase in regulatory assets | (4,608) | | | (5,346) | | | (12,789) | | | — | | | — | | | | (22,743) | |
| Increase in regulatory liabilities | 38,413 | | | 6,597 | | | 3,423 | | | — | | | — | | | | 48,433 | |
| Increase (decrease) in accounts payable | 9,879 | | | (1,687) | | | 1,452 | | | — | | | — | | | | 9,644 | |
Change in prepaid and accrued income taxes, tax credits and revenue taxes | (14,192) | | | (2,325) | | | (8,614) | | | 1,138 | | | (2,549) | | [1] | | (26,542) | |
Change in defined benefit pension and other postretirement benefit plans asset/liability | (6,334) | | | (1,521) | | | (1,363) | | | — | | | — | | | | (9,218) | |
Increase in wildfire tort-related claims | 1,457,000 | | | 191,500 | | | 191,500 | | | — | | | — | | | | 1,840,000 | |
Change in other assets and liabilities | (52,774) | | | (4,035) | | | (23,280) | | | 187,788 | | | (172,466) | | [1] | | (64,767) | |
Net cash provided by (used in) operating activities | 342,812 | | | 77,686 | | | 49,870 | | | (2,086) | | | (2,549) | | | | 465,733 | |
Cash flows from investing activities | | | | | | | | | | | | |
| Capital expenditures | (197,142) | | | (51,209) | | | (81,128) | | | — | | | — | | | | (329,479) | |
Advances to affiliates | (46,700) | | | — | | | — | | | — | | | 46,700 | | [1] | | — | |
| Other | (10,169) | | | 679 | | | (1,011) | | | — | | | 22,349 | | [1][2] | | 11,848 | |
| Net cash used in investing activities | (254,011) | | | (50,530) | | | (82,139) | | | — | | | 69,049 | | | | (317,631) | |
| Cash flows from financing activities | | | | | | | | | | | | |
| Common stock dividends | (26,000) | | | — | | | — | | | — | | | — | | | | (26,000) | |
Preferred stock dividends of Hawaiian Electric and subsidiaries | (1,995) | | | — | | | — | | | — | | | — | | | | (1,995) | |
| Proceeds from issuance of common stock/capital contribution from parent | 270 | | | — | | | — | | | 19,800 | | | (19,800) | | [2] | | 270 | |
Repayment of long-term debt and funds transferred for repayment of long-term debt | (74,000) | | | (5,000) | | | (2,000) | | | — | | | — | | | | (81,000) | |
Net increase in short-term borrowings from non-affiliates and affiliate with original maturities of three months or less | — | | | — | | | 46,700 | | | — | | | (46,700) | | [1] | | — | |
| Proceeds from issuance of short-term debt | 50,000 | | | — | | | — | | | — | | | — | | | | 50,000 | |
| Payments of obligations under finance leases | (3,487) | | | (632) | | | — | | | — | | | — | | | | (4,119) | |
| Other | (6,977) | | | (648) | | | (1,562) | | | — | | | — | | | | (9,187) | |
Net cash provided by (used in) financing activities | (62,189) | | | (6,280) | | | 43,138 | | | 19,800 | | | (66,500) | | | | (72,031) | |
| Net increase in cash and cash equivalents | 26,612 | | | 20,876 | | | 10,869 | | | 17,714 | | | — | | | | 76,071 | |
Cash, cash equivalents and restricted cash, January 1 | 91,755 | | | 10,658 | | | 5,587 | | | 77 | | | — | | | | 108,077 | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Cash and cash equivalents, December 31 | $ | 118,367 | | | 31,534 | | | 16,456 | | | 17,791 | | | — | | | | $ | 184,148 | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Consolidating statement of cash flows
Year ended December 31, 2023
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (in thousands) | Hawaiian Electric | | Hawaii Electric Light | | Maui Electric | | Other subsidiary | | Consolidating
adjustments | | | Hawaiian Electric
Consolidated |
| Cash flows from operating activities | | | | | | | | | | | | |
| Net income | $ | 195,032 | | | 29,041 | | | 16,683 | | | — | | | (44,809) | | [2] | | $ | 195,947 | |
Adjustments to reconcile net income to net cash provided by operating activities | | | | | | | | | | | | |
Equity in earnings of subsidiaries | (44,809) | | | — | | | — | | | — | | | 44,809 | | [2] | | — | |
Common stock dividends received from subsidiaries | 24,450 | | | — | | | — | | | — | | | (24,450) | | [2] | | — | |
Depreciation of property, plant and equipment | 164,150 | | | 42,541 | | | 37,014 | | | — | | | — | | | | 243,705 | |
| Other amortization | 17,692 | | | 5,003 | | | 3,795 | | | — | | | — | | | | 26,490 | |
| Deferred income tax expense (benefit) | (851) | | | (296) | | | 2,586 | | | — | | | — | | | | 1,439 | |
State refundable credit | (7,577) | | | (1,782) | | | (1,966) | | | — | | | — | | | | (11,325) | |
| Bad debt expense | 5,565 | | | 1,353 | | | 1,243 | | | — | | | — | | | | 8,161 | |
Allowance for equity funds used during construction | (11,721) | | | (1,411) | | | (2,032) | | | — | | | — | | | | (15,164) | |
Other | 380 | | | (46) | | | 126 | | | — | | | — | | | | 460 | |
| Changes in assets and liabilities: | | | | | | | | | | | | |
| Increase in accounts receivable | (83,401) | | | (7,398) | | | (29,301) | | | — | | | 55,096 | | [1] | | (65,004) | |
| Decrease (increase) in accrued unbilled revenues | 8 | | | (1,308) | | | (1,748) | | | — | | | — | | | | (3,048) | |
| Decrease (increase) in fuel oil stock | 45,114 | | | (1,004) | | | (817) | | | — | | | — | | | | 43,293 | |
Increase in materials and supplies | (16,204) | | | (4,614) | | | (14,047) | | | — | | | — | | | | (34,865) | |
| Decrease (increase) in regulatory assets | (6,616) | | | 5,501 | | | (9,498) | | | — | | | — | | | | (10,613) | |
| Increase (decrease) in regulatory liabilities | 48,833 | | | (1,176) | | | 6,813 | | | — | | | — | | | | 54,470 | |
Increase in accounts payable | 13,988 | | | 5,998 | | | 468 | | | — | | | — | | | | 20,454 | |
Change in prepaid and accrued income taxes, tax credits and revenue taxes | 4,314 | | | 2,407 | | | (4,843) | | | — | | | — | | | | 1,878 | |
| Change in defined benefit pension and other postretirement benefit plans asset/liability | (5,653) | | | (1,348) | | | (1,185) | | | — | | | — | | | | (8,186) | |
| Increase in wildfire tort-related claims | 75,000 | | | — | | | — | | | — | | | — | | | | 75,000 | |
Change in other assets and liabilities | (12,990) | | | 2,056 | | | 17,305 | | | — | | | (55,096) | | [1] | | (48,725) | |
Net cash provided by operating activities | 404,704 | | | 73,517 | | | 20,596 | | | — | | | (24,450) | | | | 474,367 | |
Cash flows from investing activities | | | | | | | | | | | | |
| Capital expenditures | (276,600) | | | (63,889) | | | (98,286) | | | — | | | — | | | | (438,775) | |
Advances from (to) affiliates | (70,500) | | | 4,500 | | | 21,700 | | | — | | | 44,300 | | [1] | | — | |
| Other | 4,118 | | | 932 | | | 1,126 | | | — | | | — | | | | 6,176 | |
| Net cash used in investing activities | (342,982) | | | (58,457) | | | (75,460) | | | — | | | 44,300 | | | | (432,599) | |
| Cash flows from financing activities | | | | | | | | | | | | |
| Common stock dividends | (129,000) | | | (13,425) | | | (11,025) | | | — | | | 24,450 | | [2] | | (129,000) | |
Preferred stock dividends of Hawaiian Electric and subsidiaries | (1,080) | | | (534) | | | (381) | | | — | | | — | | | | (1,995) | |
Proceeds from the issuance of long-term debt | 300,000 | | | 25,000 | | | 25,000 | | | — | | | — | | | | 350,000 | |
Repayment of long-term debt | (50,000) | | | (20,000) | | | (30,000) | | | — | | | — | | | | (100,000) | |
| Net increase (decrease) in short-term borrowings from non-affiliates and affiliate with original maturities of three months or less | (114,167) | | | — | | | 70,500 | | | — | | | (44,300) | | [1] | | (87,967) | |
Payments of obligations under finance leases | (2,728) | | | (400) | | | — | | | — | | | — | | | | (3,128) | |
| Other | (571) | | | (135) | | | (137) | | | — | | | — | | | | (843) | |
| Net cash provided by (used in) financing activities | 2,454 | | | (9,494) | | | 53,957 | | | — | | | (19,850) | | | | 27,067 | |
| Net increase (decrease) in cash, cash equivalents and restricted cash | 64,176 | | | 5,566 | | | (907) | | | — | | | — | | | | 68,835 | |
| Cash, cash equivalents and restricted cash, January 1 | 27,579 | | | 5,092 | | | 6,494 | | | 77 | | | — | | | | 39,242 | |
| Cash, cash equivalents and restricted cash, December 31 | 91,755 | | | 10,658 | | | 5,587 | | | 77 | | | — | | | | 108,077 | |
Less: Restricted cash | (2,000) | | | — | | | — | | | — | | | — | | | | (2,000) | |
Cash and cash equivalents, December 31 | $ | 89,755 | | | 10,658 | | | 5,587 | | | 77 | | | — | | | | $ | 106,077 | |
Explanation of consolidating adjustments on consolidating schedules:
[1] Eliminations of intercompany receivables and payables and other intercompany transactions
[2] Elimination of investment in subsidiaries, carried at equity
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
| | |
Note 5. Discontinued operations |
As a result of a comprehensive review of strategic options of ASB, on December 30, 2024, HEI, ASB, and ASB Hawaii, a wholly owned subsidiary of HEI and ASB’s parent holding company, entered into investment agreements to sell 90.1% of the common stock of ASB, amounting to $405.5 million, to various investors including certain ASB officers and directors of ASB, while retaining a 9.9% noncontrolling investment in ASB amounting to $44.6 million. The sale transaction closed on December 31, 2024 and no investor acquired more than 9.9% of the common stock of ASB. The proceeds from the sale was used to repay a ratable portion of each of HEI’s senior notes in April 2025.
The sale of ASB met the accounting requirements to be disclosed as discontinued operations. Accordingly, the results of ASB, including the loss on the ASB sale, are presented as discontinued operations in the consolidated statements of income and cash flows, and have been excluded from both continuing operations and segment results for the 2024 and 2023 periods presented.
The Company recorded a net loss on the sale transaction amounting to $115.8 million, which is net of a $2.4 million tax benefit, and is included in “Income (loss) from discontinued operations” in the Company’s Consolidated Statements of Income. The tax benefit includes a valuation allowance of $66.4 million recorded against the related deferred tax assets generated in connection with the sale transaction as it is more likely than not that these deferred tax assets will not be realized. See Note 13. A summary of the ASB sale transaction as of December 31, 2024 is as follows: | | | | | |
| (in thousands) | December 31, 2024 |
| |
Sale proceeds received | $ | 400,950 | |
Sale proceeds accrued (received in 2025) | 4,500 | |
Investment retained in ASB | 44,550 | |
Transaction costs | (21,735) | |
Net assets derecognized | (546,458) | |
| Loss from the sale of ASB | (118,193) | |
| |
Income taxes | 68,820 | |
Income taxes - valuation allowance | (66,430) | |
Income taxes, net | 2,390 | |
| |
Net loss on the sale transaction | (115,803) | |
Net income from operations of discontinued bank segment | 12,317 | |
Loss from discontinued operations | $ | (103,486) | |
For the year ended December 31, 2024, total noncash transactions of the ASB sale amounted to $507.8 million comprised of the derecognized net assets of ASB, the Company’s investment retained in ASB, accrued transaction costs and other noncash transactions.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The following table summarizes the income (loss) from discontinued operations included in the Consolidated Statements of Income for the periods presented:
| | | | | | | | | | | |
| Years ended December 31 | 2024 | | 2023 |
| (in thousands) | | | |
| Interest and dividend income | | | |
| Interest and fees on loans | $ | 293,100 | | | $ | 276,688 | |
| Interest and dividends on investment securities | 55,944 | | | 58,095 | |
| Total interest and dividend income | 349,044 | | | 334,783 | |
| Interest expense | | | |
| Interest on deposit liabilities | 72,727 | | | 48,905 | |
| Interest on other borrowings | 27,442 | | | 33,892 | |
| Total interest expense | 100,169 | | | 82,797 | |
| Net interest income | 248,875 | | | 251,986 | |
| Provision for credit losses | (1,963) | | | 10,357 | |
| Net interest income after provision for credit losses | 250,838 | | | 241,629 | |
| Noninterest income | | | |
| Fees from other financial services | 20,797 | | | 19,034 | |
| Fee income on deposit liabilities | 19,900 | | | 19,131 | |
| Fee income on other financial products | 11,798 | | | 10,616 | |
| Bank-owned life insurance | 13,079 | | | 7,390 | |
| Mortgage banking income | 1,419 | | | 910 | |
| Gain on sale of real estate | — | | | 495 | |
Loss on sale of investment securities, net | — | | | (14,965) | |
| Other income, net | 2,535 | | | 2,799 | |
| Total noninterest income | 69,528 | | | 45,410 | |
| Noninterest expense | | | |
| Compensation and employee benefits | 126,936 | | | 118,297 | |
| Occupancy | 21,382 | | | 21,703 | |
| Data processing | 19,612 | | | 20,545 | |
| Services | 17,485 | | | 13,943 | |
| Equipment | 9,914 | | | 11,842 | |
| Office supplies, printing and postage | 4,085 | | | 4,315 | |
| Marketing | 3,506 | | | 4,001 | |
| Goodwill impairment | 82,190 | | | — | |
| FDIC insurance | 5,992 | | | 6,230 | |
| Other expense | 15,907 | | | 22,762 | |
| Total noninterest expense | 307,009 | | | 223,638 | |
Income before income taxes | 13,357 | | | 63,401 | |
Income taxes | 1,040 | | | 10,039 | |
Net income from operations of discontinued bank segment | 12,317 | | | 53,362 | |
Loss from the sale of ASB | (118,193) | | | — | |
Income tax benefit | 2,390 | | | — | |
Income (loss) from discontinued operations | $ | (103,486) | | | $ | 53,362 | |
| | | |
| | | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
| | |
Note 6 · Short-term borrowings |
Commercial paper and other. As of December 31, 2025 and 2024, HEI and Hawaiian Electric had no commercial paper outstanding.
As of December 31, 2025, HEI had no letters of credit outstanding. As of December 31, 2024, HEI had four undrawn letters of credit outstanding in the aggregate amount of $6 million, on behalf of Mauo and Hamakua Energy.
Credit agreements.
Syndicated credit agreements. On September 5, 2025, HEI and Hawaiian Electric each entered into a fourth amended and restated senior unsecured revolving credit facility (the HEI Facility and the Hawaiian Electric Facility, respectively, and together, the Credit Facilities) with a syndicate of eight financial institutions. The aggregate amount of revolving commitments under the HEI Facility was increased to $300 million from $175 million and includes a $25 million letter of credit sub-facility and a $30 million swingline sub-facility. The HEI Facility’s commitment termination date was extended to September 5, 2030 from May 14, 2027. The aggregate amount of revolving commitments available under the Hawaiian Electric Facility was increased to $300 million from $200 million and includes a $40 million letter of credit sub-facility and a $30 million swingline sub-facility. The Hawaiian Electric Facility’s term was extended to September 4, 2026, subject to an automatic extension to the earlier of (i) such date specified in a final order or approval of the PUC and (ii) if such order or approval is obtained, September 5, 2030. The Hawaiian Electric Facility also allows for commitment increases of up to an additional $75 million, subject to customary conditions. None of the facilities are collateralized. As of December 31, 2025, HEI and Hawaiian Electric had $20 million and nil drawn on its revolving facility, respectively.
Under the Credit Facilities, draws generally bear interest, based on each company’s respective current long-term credit ratings, at the “Adjusted Term SOFR Rate,” as defined in the Credit Facilities, plus 250.0 and 225.0 basis points for HEI and Hawaiian Electric, respectively, and incur annual fees on undrawn commitments, excluding swingline borrowings, at the rate of 45.0 and 40.0 basis points for HEI and Hawaiian Electric, respectively.
Additionally, the Credit Facilities contain provisions for pricing adjustments in the event of a long-term ratings change based on the respective facility’s ratings-based pricing grid, which includes the ratings by Fitch, Moody’s and S&P. The Credit Facilities do not contain clauses that would affect access to the Credit Facilities by reason of a ratings downgrade, nor do they have broad “material adverse change” clauses.
The Credit Facilities also include terms and conditions customary for facilities of this type and contain customary conditions that must be met in order to draw on them, including compliance with covenants (such as covenants preventing HEI’s and Hawaiian Electric’s respective subsidiaries from entering into agreements that restrict the ability of such subsidiaries to pay dividends to, or to repay borrowings from, HEI or Hawaiian Electric, as applicable; and a covenant in Hawaiian Electric’s Facility restricting Hawaiian Electric’s ability, as well as the ability of any of its subsidiaries, to guarantee additional indebtedness of the subsidiaries if such additional debt would cause the subsidiary’s “Consolidated Subsidiary Funded Debt to Capitalization Ratio” (as defined in the Hawaiian Electric Facility) to exceed 65%).
Under the HEI Facility, it is an event of default if HEI fails to maintain an unconsolidated “Capitalization Ratio” (funded debt) (as defined in the HEI Facility) of 50% or less or if HEI sells Hawaiian Electric. Under the Hawaiian Electric Facility, it is an event of default if Hawaiian Electric fails to maintain a “Consolidated Capitalization Ratio” (equity) (as defined in the Hawaiian Electric Facility) of at least 35%, or if Hawaiian Electric is no longer owned by HEI.
Intercompany borrowing agreement. Under the HEI and Hawaiian Electric Intercompany Borrowing and Investment Policy effective January 1, 2020 (the Intercompany Borrowing Policy), HEI has committed to make revolving short-term loans to Hawaiian Electric pursuant to the terms set forth in the standing commitment letter dated December 5, 2025 (the 2025 Commitment Letter). For loans that mature on or before December 4, 2026, the 2025 Commitment Letter provides a borrowing limit of $75 million outstanding at any time and the applicable interest rate. Hawaiian Electric currently has no borrowings under the Intercompany Borrowing Policy and the 2025 Commitment Letter.
Asset-based lending facility credit agreement. On May 17, 2024, Hawaiian Electric, through a special-purpose subsidiary, entered into an ABL Facility credit agreement (ABL Credit Facility Agreement) with several banks, which, subject to the limitations and conditions set forth in such agreement, including approval by the PUC, allows borrowings of up to $250 million on a revolving basis using certain accounts receivable as collateral. Hawaiian Electric filed an application with the PUC for approval to (i) sell accounts receivable, and (ii) establish a long-term credit facility. The first approval would allow the ABL Credit Facility Agreement to become effective for 364 days and the second approval would extend the term of the ABL Credit Facility Agreement from 364 days to three years. The ABL Credit Facility Agreement has an initial term of 364 days, with an automatic extension to three years upon receipt of the second PUC approval, with three separate options to extend one
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
additional year, subject to the consent of the lenders. Hawaiian Electric received the first and second approvals from the PUC for the ABL Credit Facility Agreement that allows short-term and long-term borrowings of up to $250 million on June 27, 2024 and October 11, 2024, respectively, subject to the availability of a sufficient borrowing base of eligible receivables. The ABL Facility became effective on July 24, 2024. As of December 31, 2025, total available capacity under the ABL Facility was $240 million and remains undrawn.
| | | | | | | | | | | |
| December 31 | 2025 | | 2024 |
| (dollars in thousands) | | | |
Long-term debt of Utilities, net of unamortized debt issuance costs1 | $ | 2,182,833 | | | $ | 1,901,214 | |
| | | |
HEI 4.58% senior notes, paid in 2025 | — | | | 50,000 | |
HEI 4.72% senior notes, due 2028 | 37,096 | | | 100,000 | |
HEI 2.82% senior notes, due 2028 | 8,903 | | | 24,000 | |
HEI 2.48% senior notes, due 2028 | 11,129 | | | 30,000 | |
HEI 6.04% senior notes, due 2028 | 14,467 | | | 39,000 | |
HEI 2.98% senior notes, due 2030 | 18,548 | | | 50,000 | |
HEI 3.15% senior notes, due 2031 | 18,919 | | | 51,000 | |
HEI 2.78% senior notes, due 2031 | 9,274 | | | 25,000 | |
HEI 2.98% senior notes, due 2032 | 11,129 | | | 30,000 | |
HEI 5.43% senior notes, due 2032 | 27,822 | | | 75,000 | |
HEI 6.10% senior notes, due 2033 | 22,629 | | | 61,000 | |
HEI 5.43% senior notes, due 2034 | 12,984 | | | 35,000 | |
HEI 3.74% senior notes, due 2051 | 7,419 | | | 20,000 | |
HEI 3.94% senior notes, due 2052 | 7,419 | | | 20,000 | |
Hamakua Energy 4.02% non-recourse notes, due 20302 | — | | | 39,026 | |
| | | |
Mauo 5.07% non-recourse term loan, due 2034 to 20352 | — | | | 20,795 | |
Kaʻieʻie Waho 2.79% non-recourse loan, due 20312 | — | | | 8,517 | |
Mahipapa 2.14% non-recourse loan, due 2034 to 20363 | — | | | 53,263 | |
Mahipapa 5.625% non-recourse loan, due 20273 | — | | | 424 | |
HEI revolving credit facility SOFR + 2.50%, due 20304 | 20,000 | | | 173,000 | |
| Less unamortized debt issuance costs and debt discount | (596) | | | (6,681) | |
Less current portion long-term debt, net of unamortized debt issuance cost | (124,959) | | | (109,171) | |
Long term debt, net | $ | 2,285,016 | | | $ | 2,690,387 | |
| | | |
| | | |
1 See components of “Total long-term debt” and unamortized debt issuance costs in Hawaiian Electric and subsidiaries’ Consolidated Statements of Capitalization.
2 The debt of Hamakua Energy, Mauo and Ka’ie’ie Waho was transferred to the buyer as part of the sale of these entities in 2025. See Note 3 for more information.
3 Mahipapa’s non-recourse loans amounting to $54 million, as of December 31, 2025, are classified as “Liabilities held for sale” on the Company’s Consolidated Balance Sheets. See Note 3 for more information.
4 As of December 31, 2025 and 2024, the weighted-average interest rate was 6.32% and 6.89%, respectively. At December 31, 2024, the credit facility’s interest rate was based on term SOFR plus the applicable margin of 1.75%, reduced by a 0.05% sustainability margin adjustment, plus an additional 0.10% spread adjustment.
As of December 31, 2025, the aggregate principal payments required on the Company’s long-term debt for 2026 through 2030 are $125 million in 2026, $100 million in 2027, $139 million in 2028, $35 million in 2029 and $189 million in 2030. As of December 31, 2025, the aggregate payments of principal required on the Utilities’ long-term debt for 2026 through 2030 are $125 million in 2026, $100 million in 2027, $68 million in 2028, $35 million in 2029 and $150 million in 2030.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The HEI senior notes contain customary representation and warranties, affirmative and negative covenants and events of default (the occurrence of which may result in some or all of the notes then outstanding becoming immediately due and payable). The HEI senior notes also contain provisions requiring the maintenance by HEI of certain financial ratios generally consistent with those in HEI’s revolving unsecured credit facility, as amended. Upon a change of control or certain dispositions of assets (as defined in the note purchase agreements of the senior notes), HEI is required to offer to prepay the senior notes.
The Utilities’ senior notes contain customary representations and warranties, affirmative and negative covenants, and events of default (the occurrence of which may result in some or all of the notes of each and all of the utilities then outstanding becoming immediately due and payable) and provisions requiring the maintenance by Hawaiian Electric, and each of Hawaii Electric Light and Maui Electric, of certain financial ratios generally consistent with those in Hawaiian Electric’s existing, amended revolving unsecured credit agreement.
Changes in long-term debt. As of December 31, 2025, HEI and Hawaiian Electric were in compliance with all applicable financial covenants.
HEI and Hawaiian Electric’s Credit Facilities. See Note 6 for more information.
HEI senior notes. On April 9, 2025, pursuant to a March 5, 2025 offer tendered to, and accepted by, each holder of its outstanding senior notes issued pursuant to a series of six separate note purchase agreements, HEI repaid a ratable portion of each note using the net cash proceeds from the sale of ASB amounting to $384 million, together with interest accrued amounting to $5 million.
Hawaiian Electric notes. On September 18, 2025, pursuant to the July 24, 2025 PUC approval, Hawaiian Electric issued $500 million in unsecured senior notes with an interest rate of 6.00% (2025 Notes). The 2025 Notes will mature on October 1, 2033. Hawaiian Electric may redeem the 2025 Notes, in whole or in part, at any time or from time to time prior to October 1, 2028 at a redemption price equal to 100% of the aggregate principal amount of the 2025 Notes to be redeemed, plus a “make-whole” amount set forth in the agreement, plus accrued and unpaid interest, if any, to, but not including, the redemption date. On or after October 1, 2028, Hawaiian Electric may redeem the 2025 Notes, in whole or in part, at the redemption prices set forth in the agreement plus accrued and unpaid interest, if any, to, but not including, the redemption date. The 2025 Notes contain certain restrictive financial covenants that are substantially the same as the financial covenants of the Utilities’ other unsecured senior notes.
Mahipapa non-recourse loan. 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 lender granted Mahipapa a deferral of scheduled principal and interest payments March 2024 through December 2025 totaling $10 million. The deferred payments will be repaid in March 2026. The facility was restarted in December 2024. Mahipapa’s non-recourse loans amounting to $54 million as of December 31, 2025, are classified as “Liabilities held for sale” on the Company’s Consolidated Balance Sheets. See Note 3 for more information.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
| | |
Note 8 · Shareholders’ equity |
Reserved shares. As of December 31, 2025, HEI had a total of 33.2 million of authorized and unissued shares of common stock available for future issuance under the HEI Dividend Reinvestment and Stock Purchase Plan (DRIP), the Hawaiian Electric Industries Retirement Savings Plan (HEIRSP), the HEI 2011 Nonemployee Director Stock Plan, the 2010 Equity and Incentive Plan, as amended, and at-the-market offering program. Under HEI’s at-the-market offering program, 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.
Accumulated other comprehensive income/(loss). Changes in the balances of each component of AOCI were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| HEI Consolidated | | Hawaiian Electric Consolidated |
| (in thousands) | Net unrealized gains (losses) on securities | | Unrealized gains (losses) on derivatives | | Retirement benefit plans | | AOCI | | AOCI-Retirement benefit plans |
| Balance, December 31, 2022 | $ | (328,904) | | | $ | 1,991 | | | $ | (9,115) | | | $ | (336,028) | | | $ | 2,861 | |
Current period other comprehensive income (loss) and reclassifications, net of taxes | 45,941 | | | (353) | | | 1,090 | | | 46,678 | | | (12) | |
| Balance, December 31, 2023 | (282,963) | | | 1,638 | | | (8,025) | | | (289,350) | | | 2,849 | |
Current period other comprehensive income (loss) and reclassifications, net of taxes | 1,785 | | | 482 | | | 917 | | | 3,184 | | | (63) | |
Discontinued operations | 281,178 | | | — | | | 8,449 | | | 289,627 | | | — | |
| Balance, December 31, 2024 | — | | | 2,120 | | | 1,341 | | | 3,461 | | | 2,786 | |
Current period other comprehensive income (loss) and reclassifications, net of taxes | — | | | (1,520) | | | 1,397 | | | (123) | | | (146) | |
| | | | | | | | | |
| Balance, December 31, 2025 | $ | — | | | $ | 600 | | | $ | 2,738 | | | $ | 3,338 | | | $ | 2,640 | |
Reclassifications out of AOCI were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Amount reclassified from AOCI | | Affected line item in the Statement of
Income/Balance Sheet |
| Years ended December 31 | | 2025 | | 2024 | | 2023 | |
| (in thousands) | | | | | | | | |
| HEI consolidated | | | | | | | | |
Available-for sale investment securities: | | | | | | | | |
Net realized losses on securities included in net income | | $ | — | | | $ | — | | | $ | 10,954 | | | Assets of discontinued operations |
| Amortization of unrealized holding losses on held-to-maturity securities | | — | | | 13,012 | | | 14,398 | | | Income (loss) from discontinued operations |
Net realized gains on derivatives qualifying as cash flow hedges | | (1,031) | | | (201) | | | (186) | | | Interest expense |
| Retirement benefit plans: | | | | | | | | |
Amortization of prior service credit and net gains recognized during the period in net periodic benefit cost | | (2,057) | | | (1,730) | | | (1,560) | | | See Note 11 for additional details |
| Impact of D&Os of the PUC included in regulatory assets | | (74,419) | | | (63,708) | | | (8,204) | | | See Note 11 for additional details |
| Total reclassifications | | $ | (77,507) | | | $ | (52,627) | | | $ | 15,402 | | | |
| Hawaiian Electric consolidated | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| Retirement benefit plans: | | | | | | | | |
Amortization of prior service credit and net gains recognized during the period in net periodic benefit cost | | $ | (2,182) | | | $ | (2,035) | | | $ | (1,983) | | | See Note 11 for additional details |
| Impact of D&Os of the PUC included in regulatory assets | | (74,419) | | | (63,708) | | | (8,204) | | | See Note 11 for additional details |
| Total reclassifications | | $ | (76,601) | | | $ | (65,743) | | | $ | (10,187) | | | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The Company leases certain real estate and equipment for various terms under long-term lease agreements. The agreements expire at various dates through 2054 and provide for renewal options up to 10 years. The periods associated with the renewal options are excluded for the purpose of determining the lease term unless the exercise of the renewal option is reasonably certain. In the normal course of business, it is expected that many of these agreements will be replaced by similar agreements. Certain real estate leases require the Company to pay for operating expenses such as common area maintenance, real estate taxes and insurance, which are recognized as variable lease expense when incurred and are not included in the measurement of the lease liability. The Company elected the short-term lease recognition exemption for all of its leases that qualify, and accordingly, does not recognize lease liabilities and ROU assets for all leases that have lease terms that are 12 months or less. The amounts related to short-term leases are not material. The Company elected the practical expedient to not separate lease and non-lease components for its real estate and equipment and fossil fuel and renewable energy PPAs and to separate lease components from non-lease components for renewable energy plus battery storage PPAs.
The Utilities contract with independent power producers to supply energy under long-term power purchase agreements. Certain PPAs are treated as operating leases under the lease standard because the Company elected the practical expedient package under which prior conclusions about lease identification were not reassessed. The fixed capacity payments under the PPAs are included in the lease liability, while the variable lease payments (e.g., payments based on kWh) are excluded from the lease liability. Several as-available PPAs have variable-only payment terms based on production. For PPAs with no minimum lease payments, the Utilities do not recognize any lease liabilities or ROU assets, and the related costs are reported as variable lease costs.
The Utilities’ lease payments for each operating lease agreement were discounted using its estimated unsecured borrowing rates for the appropriate term, reduced for the estimated impact of collateral, which is a reduction of approximately 50 basis points.
The Utilities account for the battery portion of renewable energy plus storage and energy storage PPAs as leases at their commencement dates. As of December 31, 2025, the Utilities recognized additional finance lease liabilities with corresponding ROU assets of $92.4 million, including Hale Kuawehi and Hoohana Solar project that began commercial operations during the year. The timing of the Utilities’ recognition of the expense conforms to ratemaking treatment for the Utilities’ recovery of the cost of electricity and is included in purchased power for the interest and amortization of financing leases related to PPAs. Any material differences between expense recognition and timing of payments are deferred as a regulatory asset or liability in order to match what is being recovered for ratemaking purposes.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Amounts related to the Company’s total lease cost and cash flows arising from lease transactions are as follows: | | | | | | | | | | | | | | | | | | | | | | | |
| HEI consolidated | | Hawaiian Electric consolidated |
| Year ended December 31, 2025 | Other leases | PPAs classified as leases | Total | | Other leases | PPAs classified as leases | Total |
| (dollars in thousands) | | | | | | | |
| Operating lease cost | $ | 14,250 | | $ | 5,180 | | $ | 19,430 | | | $ | 13,335 | | $ | 5,180 | | $ | 18,515 | |
| | | | | | | |
| Variable lease cost | 5,956 | | 192,360 | | 198,316 | | | 5,777 | | 192,360 | | 198,137 | |
| Sublease income | (2,972) | | — | | (2,972) | | | (2,972) | | — | | (2,972) | |
| Total operating lease cost | $ | 17,234 | | $ | 197,540 | | $ | 214,774 | | | $ | 16,140 | | $ | 197,540 | | $ | 213,680 | |
| Finance lease costs: | | | | | | | |
| Amortization of right-of-use assets | $ | 446 | | $ | 23,870 | | $ | 24,316 | | | $ | — | | $ | 23,870 | | $ | 23,870 | |
| Interest on lease liabilities | 22 | | 41,020 | | 41,042 | | | — | | 41,020 | | 41,020 | |
| Total finance lease cost | $ | 468 | | $ | 64,890 | | $ | 65,358 | | | $ | — | | $ | 64,890 | | $ | 64,890 | |
| Other information | | | | | | | |
| Cash paid for amounts included in the measurement of lease liabilities: | | | | | | | |
| Operating cash flows from operating leases | $ | 15,017 | | $ | 5,136 | | $ | 20,153 | | | $ | 14,131 | | $ | 5,136 | | $ | 19,267 | |
Operating cash flows from finance leases | 22 | | 40,102 | | 40,124 | | | — | | 40,102 | | 40,102 | |
Financing cash flows from finance leases | 466 | | 9,905 | | 10,371 | | | — | | 9,905 | | 9,905 | |
| Weighted-average remaining lease term (in years): | | | | | | | |
| Operating leases | 5.8 | 2.0 | 5.2 | | 5.8 | 2.0 | 5.2 |
| Finance leases | — | | 19.4 | 19.4 | | — | | 19.4 | 19.4 |
| Weighted-average discount rate: | | | | | | | |
| Operating leases | 4.19 | % | 8.78 | % | 4.86 | % | | 4.21 | % | 8.78 | % | 4.91 | % |
| Finance leases | — | | 8.71 | % | 8.71 | % | | — | | 8.71 | % | 8.71 | % |
| | | | | | | | | | | | | | | | | | | | | | | |
| HEI consolidated | | Hawaiian Electric consolidated |
| Year ended December 31, 2024 | Other leases | PPAs classified as leases | Total | | Other leases | PPAs classified as leases | Total |
| (dollars in thousands) | | | | | | | |
| Operating lease cost | $ | 13,736 | | $ | 4,163 | | $ | 17,899 | | | $ | 12,821 | | $ | 4,163 | | $ | 16,984 | |
| | | | | | | |
| Variable lease cost | 5,378 | | 222,189 | | 227,567 | | | 5,191 | | 222,189 | | 227,380 | |
| Sublease income | (3,280) | | — | | (3,280) | | | (3,280) | | — | | (3,280) | |
Total operating lease cost | $ | 15,834 | | $ | 226,352 | | $ | 242,186 | | | $ | 14,732 | | $ | 226,352 | | $ | 241,084 | |
| Finance lease costs: | | | | | | | |
| Amortization of right-of-use assets | $ | 574 | | $ | 19,498 | | $ | 20,072 | | | $ | — | | $ | 19,498 | | $ | 19,498 | |
| Interest on lease liabilities | 33 | | 32,344 | | 32,377 | | | — | | 32,344 | | 32,344 | |
| Total finance lease cost | $ | 607 | | $ | 51,842 | | $ | 52,449 | | | $ | — | | $ | 51,842 | | $ | 51,842 | |
| Other information | | | | | | | |
| Cash paid for amounts included in the measurement of lease liabilities: | | | | | | | |
Operating cash flows from operating leases | $ | 15,604 | | $ | 3,871 | | $ | 19,475 | | | $ | 14,739 | | $ | 3,871 | | $ | 18,610 | |
Operating cash flows from finance leases | 33 | | 30,939 | | 30,972 | | | — | | 30,939 | | 30,939 | |
Financing cash flows from finance leases | 559 | | 4,119 | | 4,678 | | | — | | 4,119 | | 4,119 | |
| Weighted-average remaining lease term (in years): | | | | | | | |
Operating leases | 8.2 | 3.0 | 7.2 | | 6.4 | 3.0 | 5.6 |
Finance leases | 3.7 | 19.9 | 19.9 | | — | | 19.9 | 19.9 |
| Weighted-average discount rate: | | | | | | | |
Operating leases | 3.08 | % | 8.78 | % | 4.11 | % | | 2.95 | % | 8.78 | % | 4.21 | % |
Finance leases | 2.23 | % | 8.50 | % | 8.49 | % | | — | | 8.50 | % | 8.50 | % |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
| | | | | | | | | | | | | | | | | | | | | | | |
| HEI consolidated | | Hawaiian Electric consolidated |
| Year ended December 31, 2023 | Other leases | PPAs classified as leases | Total | | Other leases | PPAs classified as leases | Total |
| (dollars in thousands) | | | | | | | |
| Operating lease cost | $ | 16,853 | | $ | 4,071 | | $ | 20,924 | | | $ | 15,947 | | $ | 4,071 | | $ | 20,018 | |
| | | | | | | |
| Variable lease cost | 5,813 | | 202,556 | | 208,369 | | | 5,605 | | 202,556 | | 208,161 | |
| Sublease income | (3,031) | | — | | (3,031) | | | (3,031) | | — | | (3,031) | |
Total operating lease cost | $ | 19,635 | | $ | 206,627 | | $ | 226,262 | | | $ | 18,521 | | $ | 206,627 | | $ | 225,148 | |
| Finance lease costs: | | | | | | | |
| Amortization of right-of-use assets | $ | 390 | | $ | 5,591 | | $ | 5,981 | | | $ | — | | $ | 5,591 | | $ | 5,591 | |
| Interest on lease liabilities | 32 | | 6,350 | | 6,382 | | | — | | 6,350 | | 6,350 | |
| Total finance lease cost | $ | 422 | | $ | 11,941 | | $ | 12,363 | | | $ | — | | $ | 11,941 | | $ | 11,941 | |
| Other information | | | | | | | |
| Cash paid for amounts included in the measurement of lease liabilities: | | | | | | | |
Operating cash flows from operating leases | $ | 18,560 | | $ | 4,071 | | $ | 22,631 | | | $ | 17,729 | | $ | 4,071 | | $ | 21,800 | |
Operating cash flows from finance leases | 32 | | 6,350 | | 6,382 | | | — | | 6,350 | | 6,350 | |
Financing cash flows from finance leases | 391 | | 3,128 | | 3,519 | | | — | | 3,128 | | 3,128 | |
| Weighted-average remaining lease term (in years): | | | | | | | |
Operating leases | 8.3 | 4.0 | 7.6 | | 6.8 | 4.0 | 6.3 |
Finance leases | 1.5 | 20.1 | 20.0 | | — | | 20.1 | 20.1 |
| Weighted-average discount rate: | | | | | | | |
Operating leases | 3.03 | % | 3.50 | % | 3.11 | % | | 2.92 | % | 3.50 | % | 3.03 | % |
Finance leases | 3.77 | % | 8.18 | % | 8.18 | % | | — | % | 8.18 | % | 8.18 | % |
The following table summarizes the maturity of our operating lease liabilities as of December 31, 2025:
| | | | | | | | | | | | | | | | | | | | | | | |
| HEI consolidated | | Hawaiian Electric consolidated |
| (in millions) | Other leases1 | PPAs classified as leases | Total | | Other leases | PPAs classified as leases | Total |
| 2026 | $ | 16 | | $ | 5 | | $ | 21 | | | $ | 15 | | $ | 5 | | $ | 20 | |
| 2027 | 11 | | 5 | | 16 | | | 10 | | 5 | | 15 | |
| 2028 | 6 | | — | | 6 | | | 6 | | — | | 6 | |
| 2029 | 7 | | — | | 7 | | | 7 | | — | | 7 | |
| 2030 | 7 | | — | | 7 | | | 7 | | — | | 7 | |
| Thereafter | 13 | | — | | 13 | | | 13 | | — | | 13 | |
| Total lease payments | 60 | | 10 | | 70 | | | 58 | | 10 | | 68 | |
| Less: Imputed interest | (8) | | (1) | | (9) | | | (7) | | (1) | | (8) | |
Total present value of lease payments | $ | 52 | | $ | 9 | | $ | 61 | | | $ | 51 | | $ | 9 | | $ | 60 | |
1Amounts do not include $6 million of operating lease liabilities related to Mahipapa leases which are included in “Liabilities held for sale” in the Company’s Consolidated Balance Sheets as of December 31, 2025.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The following table summarizes the maturity of our finance lease liabilities for PPAs as of December 31, 2025:
| | | | | | | | | | | | | | | |
| | HEI consolidated | | | | Hawaiian Electric consolidated | |
| (in millions) | | PPAs classified as leases | | | | PPAs classified as leases | |
| 2026 | | $ | 55 | | | | | $ | 55 | | |
| 2027 | | 55 | | | | | 55 | | |
| 2028 | | 55 | | | | | 55 | | |
| 2029 | | 55 | | | | | 55 | | |
| 2030 | | 55 | | | | | 55 | | |
| Thereafter | | 793 | | | | | 793 | | |
| Total lease payments | | 1,068 | | | | | 1,068 | | |
| Less: Imputed interest | | (551) | | | | | (551) | | |
| Total present value of lease payments | | $ | 517 | | | | | $ | 517 | | |
Revenue from contracts with customers. The revenues subject to ASC Topic 606 include the Utilities’ electric energy sales revenue as further described below.
Electric utilities.
Electric energy sales. Electric energy sales represent revenues from the generation and transmission of electricity to customers under tariffs approved by the PUC. Transaction pricing for electricity is determined and approved by the PUC for each rate class and includes revenues from the base electric charges, which are composed of (1) the customer, demand, energy, and minimum charges, and (2) the power factor, service voltage, and other adjustments as provided in each rate and rate rider schedule. Electric energy sales also represent contract rate charge from the generation and transmission of electricity to the Army. The monthly pricing is recalculated on an annual basis based on actual costs, approved by the Army.
The Utilities satisfy performance obligations of electric energy sales over time, i.e., the Utilities generate and transfer control of the electricity over time as the customer simultaneously receives and consumes the benefits provided by the Utilities’ performance. Payments from customers are generally due within 30 days from the end of the billing period. As electric bills to customers reflect the amount that corresponds directly with the value of the Utilities’ performance to date, the Utilities have elected to use the right to invoice practical expedient, which entitles them to recognize revenue in the amount they have the right to invoice.
The Utilities’ revenues include amounts for recovery of various Hawaii state revenue taxes. Revenue taxes are generally recorded as an expense in the year the related revenues are recognized. For 2025, 2024 and 2023, the Utilities’ revenues include recovery of revenue taxes of approximately $273 million, $285 million and $291 million, respectively, which amounts are in “Taxes, other than income taxes” expense. However, the Utilities pay revenue taxes to the taxing authorities based on (1) the prior year’s billed revenues (in the case of public service company taxes and PUC fees) in the current year or (2) the current year’s cash collections from electric sales (in the case of franchise taxes) after year end. As of December 31, 2025 and 2024, the Utilities had recorded $169 million and $178 million, respectively, in “Taxes accrued, including revenue taxes” on the Utilities’ consolidated balance sheet for amounts previously collected from customers or accrued for public service company taxes and PUC fees, net of amounts paid to the taxing authorities. Such amounts will be used to pay public service company taxes and PUC fees owed for the following year.
All Other.
All Other sales. Other sales primarily consist of revenues from the generation and sale of renewable energy at fixed contractual prices per kWh to customers under power purchase agreements by Pacific Current subsidiaries. The performance obligation is satisfied over time as renewable energy is generated and control is transferred to the customer that simultaneously receives and consumes the benefits provided. Payments from customers are generally due within 30 days from the end of the billing period. The bill to customers reflects the amount that corresponds directly with the value of performance to date. Pacific Current has elected to use the right to invoice practical expedient, which entitles it to recognize revenue in the amount they have the right to invoice.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Revenues from other sources. Revenues from other sources not subject to ASC Topic 606 are accounted for as follows:
Electric utilities.
Regulatory revenues. Regulatory revenues primarily consist of revenues from the decoupling mechanism and cost recovery surcharges.
Decoupling mechanism - Under the current decoupling mechanism, the Utilities are allowed to recover or obligated to refund the difference between actual revenue and the target revenue as determined by the PUC, collect annual revenue adjustment mechanism (ARA) and exceptional project recovery mechanism revenues, and recover or refund performance incentive mechanism penalties or rewards. These adjustments will be reflected in tariffs in future periods. Under the PBR framework, the accrued RBA revenues as of the preceding September 30 balance and the annual ARA amount are billed from January 1 through December 31 of each year, which is within 24 months following the end of the year in which they are recorded as required by the accounting standard for alternative revenue programs (see “Regulatory proceedings” in Note 4).
Cost recovery surcharges - For the timely recovery of additional costs incurred, and reconciliation of costs and expenses included in tariffed rates, the Utilities recognize revenues under surcharge mechanisms approved by the PUC. These will be reflected in tariffs in future periods (e.g., ECRC and PPAC).
Since revenue adjustments discussed above resulted from either agreements with the PUC or change in tax law, rather than contracts with customers, they are not subject to the scope of ASC Topic 606. Also, see Notes 1, 4 and 13 of the Consolidated Financial Statements. The Utilities have elected to present these revenue adjustments on a gross basis, which results in the amounts being billed to customers presented in revenues from contracts with customers and the amortization of the related regulatory asset/liability as revenues from other sources. Depending on whether the previous deferral balance being amortized was a regulatory asset or regulatory liability, and depending on the size and direction of the current year deferral of surcharges and/or refunds to customers, it could result in negative regulatory revenue during the year.
Utility pole attachment fees. These fees primarily represent revenues from third-party companies for their access to and shared use of Utilities-owned poles through licensing agreements. As the shared portion of the utility pole is functionally dependent on the rest of the structure, no distinct goods appear to exist. Therefore, these fees are not subject to the scope of ASC Topic 606, but recognized in accordance with ASC Topic 610, Other Income.
Army privatization extraordinary O&M (EOM) fees. The monthly EOM fee provides the recovery of the incremental extraordinary O&M costs not covered under the standard utility services. The nature of the work related to transitional period revenue and monthly EOM fees do not represent the Utilities’ ongoing major or central operations (i.e., generating, and transmission and distribution of electricity) and is provided specifically for the arrangement between the Utilities and the Army. Therefore, these revenues are not subject to the scope of ASC Topic 606, but recognized in accordance with ASC Topic 610, Other Income.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Revenue disaggregation. The following tables disaggregate revenues by major source, timing of revenue recognition, and segment: | | | | | | | | | | | | | | | | | | | | | | |
| | Year ended December 31, 2025 |
| (in thousands) | | Electric utility | | | | Other | | Total |
| Revenues from contracts with customers | | | | | | | | |
Electric energy sales - residential | | $ | 992,367 | | | | | $ | — | | | $ | 992,367 | |
Electric energy sales - commercial | | 971,816 | | | | | — | | | 971,816 | |
Electric energy sales - large light and power | | 1,079,522 | | | | | — | | | 1,079,522 | |
| Electric energy sales - other | | 17,970 | | | | | — | | | 17,970 | |
| | | | | | | | |
| | | | | | | | |
| Other sales | | — | | | | | 13,669 | | | 13,669 | |
| Total revenues from contracts with customers | | 3,061,675 | | | | | 13,669 | | | 3,075,344 | |
| Revenues from other sources | | | | | | | | |
| Regulatory revenue | | (29,471) | | | | | — | | | (29,471) | |
| | | | | | | | |
| | | | | | | | |
| Other | | 38,978 | | | | | 2,045 | | | 41,023 | |
| Total revenues from other sources | | 9,507 | | | | | 2,045 | | | 11,552 | |
| Total revenues | | $ | 3,071,182 | | | | | $ | 15,714 | | | $ | 3,086,896 | |
| Timing of revenue recognition | | | | | | | | |
Total revenues from contracts with customers - services/goods transferred over time | | $ | 3,061,675 | | | | | $ | 13,669 | | | $ | 3,075,344 | |
| | | | | | | | | | | | | | | | | | | | | | |
| | Year ended December 31, 2024 |
| (in thousands) | | Electric utility | | | | Other | | Total |
| Revenues from contracts with customers | | | | | | | | |
Electric energy sales - residential | | $ | 1,012,620 | | | | | $ | — | | | $ | 1,012,620 | |
Electric energy sales - commercial | | 1,013,189 | | | | | — | | | 1,013,189 | |
Electric energy sales - large light and power | | 1,123,884 | | | | | — | | | 1,123,884 | |
| Electric energy sales - other | | 18,682 | | | | | — | | | 18,682 | |
| | | | | | | | |
| | | | | | | | |
| Other sales | | — | | | | | 11,923 | | | 11,923 | |
| Total revenues from contracts with customers | | 3,168,375 | | | | | 11,923 | | | 3,180,298 | |
| Revenues from other sources | | | | | | | | |
| Regulatory revenue | | (2,566) | | | | | — | | | (2,566) | |
| | | | | | | | |
| | | | | | | | |
| Other | | 40,891 | | | | | 1,227 | | | 42,118 | |
| Total revenues from other sources | | 38,325 | | | | | 1,227 | | | 39,552 | |
| Total revenues | | $ | 3,206,700 | | | | | $ | 13,150 | | | $ | 3,219,850 | |
| Timing of revenue recognition | | | | | | | | |
Total revenues from contracts with customers - services/goods transferred over time | | $ | 3,168,375 | | | | | $ | 11,923 | | | $ | 3,180,298 | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
| | | | | | | | | | | | | | | | | | | | | | |
| | Year ended December 31, 2023 |
| (in thousands) | | Electric utility | | | | Other | | Total |
| Revenues from contracts with customers | | | | | | | | |
Electric energy sales - residential | | $ | 1,026,321 | | | | | $ | — | | | $ | 1,026,321 | |
Electric energy sales - commercial | | 1,044,045 | | | | | — | | | 1,044,045 | |
Electric energy sales - large light and power | | 1,141,128 | | | | | — | | | 1,141,128 | |
| Electric energy sales - other | | 19,471 | | | | | — | | | 19,471 | |
| Other sales | | — | | | | | 17,540 | | | 17,540 | |
| Total revenues from contracts with customers | | 3,230,965 | | | | | 17,540 | | | 3,248,505 | |
| Revenues from other sources | | | | | | | | |
| Regulatory revenue | | 3,708 | | | | | — | | | 3,708 | |
| Other | | 34,848 | | | | | 442 | | | 35,290 | |
| Total revenues from other sources | | 38,556 | | | | | 442 | | | 38,998 | |
| Total revenues | | $ | 3,269,521 | | | | | $ | 17,982 | | | $ | 3,287,503 | |
| Timing of revenue recognition | | | | | | | | |
Total revenues from contracts with customers - services/goods transferred over time | | $ | 3,230,965 | | | | | $ | 17,540 | | | $ | 3,248,505 | |
There are no material contract assets or liabilities associated with revenues from contracts with customers existing at December 31, 2025 and 2024. Accounts receivable and unbilled revenues related to contracts with customers represent an unconditional right to consideration since all performance obligations have been satisfied. These amounts are disclosed as “Accounts receivable and unbilled revenues, net” on HEI’s consolidated balance sheets and “Customer accounts receivable, net” and “Accrued unbilled revenues, net” on Hawaiian Electric’s consolidated balance sheets.
As of December 31, 2025, the Company had no material remaining performance obligations due to the nature of the Company’s contracts with its customers. For the Utilities, performance obligations are fulfilled as electricity is delivered to customers.
| | |
Note 11 · Retirement benefits |
ASB benefit obligation. As a result of the ASB sale transaction on December 31, 2024, the Company is no longer required to recognize the contractual obligations of ASB retirement plans. Accordingly, ASB’s benefit obligation and AOCI are presented as discontinued operations in the table below. Unless otherwise noted, references within the retirement benefit footnote exclude discontinued operations.
Defined benefit plans. Substantially all of the employees of HEI and the Utilities hired on or before December 31, 2021, participate in the Retirement Plan for Employees of Hawaiian Electric Industries, Inc. and Participating Subsidiaries (HEI Pension Plan). The HEI Pension Plan (the Plan) was closed to new employees first hired on or after January 1, 2022. The Plan is a qualified, noncontributory defined benefit pension plan and includes benefits for utility union employees determined in accordance with the terms of the collective bargaining agreements between the Utilities and the union. The Plan is subject to the provisions of ERISA. In addition, some current and former executives and directors of HEI and its subsidiaries participate in noncontributory, nonqualified plans (collectively, Supplemental Plans). In general, benefits are based on the employees’ or directors’ years of service and compensation.
The continuation of the Plan and the Supplemental Plans and the payment of any contribution thereunder are not assumed as contractual obligations by the participating employers. The Supplemental Plan for directors has been frozen since 1996. The HEI Supplemental Executive Retirement Plan, Disability, and Death Benefit Plan (noncontributory, nonqualified, defined benefit plans) were frozen as of December 31, 2008. No participants have accrued any benefits under these plans after the respective plan’s freeze and the plans will be terminated at the time all remaining benefits have been paid.
The participating employer reserves the right to terminate its participation in the applicable plans at any time, and HEI reserves the right to terminate its plans at any time. If a participating employer terminates its participation in the Plan, the interest of each affected participant would become 100% vested to the extent funded. Upon the termination of the Plan, assets would be distributed to affected participants in accordance with the applicable allocation provisions of ERISA and any excess assets that exist would be paid to the participating employers. Participants’ benefits in the Plan are covered up to certain limits under insurance provided by the Pension Benefit Guaranty Corporation.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Postretirement benefits other than pensions. HEI and the Utilities provide eligible employees health and life insurance benefits upon retirement under the Postretirement Welfare Benefits Plan for Employees of Hawaiian Electric Company, Inc. and participating employers (Hawaiian Electric Benefits Plan). Eligibility of employees and dependents is based on eligibility to retire at termination, the retirement date and the date of hire. The plan was amended in 2011, changing eligibility for certain bargaining unit employees hired prior to May 1, 2011, based on new minimum age and service requirements effective January 1, 2012, per the collective bargaining agreement, and certain management employees hired prior to May 1, 2011 based on new eligibility minimum age and service requirements effective January 1, 2012. The minimum age and service requirements for management and bargaining unit employees hired May 1, 2011 and thereafter have increased and their dependents are not eligible to receive postretirement benefits. Employees may be eligible to receive benefits from the HEI Pension Plan but may not be eligible for postretirement welfare benefits if the different eligibility requirements are not met.
The executive death benefit plan was frozen on September 10, 2009 for participants at benefit levels as of that date.
The Company’s and Utilities’ cost for OPEB has been adjusted to reflect the plan amendments, which reduced benefits and created prior service credits to be amortized over average future service of affected participants. The amortization of the prior service credit will reduce benefit costs until the various credit bases are fully recognized. Each participating employer reserves the right to terminate its participation in the Hawaiian Electric Benefits Plan at any time.
Balance sheet recognition of the funded status of retirement plans. Employers must recognize on their balance sheets the funded status of defined benefit pension and other postretirement benefit plans with an offset to AOCI in shareholders’ equity (using the projected benefit obligation (PBO) and accumulated postretirement benefit obligation (APBO), to calculate the funded status).
The PUC allowed the Utilities to adopt pension and OPEB tracking mechanisms in previous rate cases. The amount of the net periodic pension cost (NPPC) and net periodic benefits costs (NPBC) to be recovered in rates is established by the PUC in each rate case or as allowed under the PBR Framework (see “Regulatory proceedings” in Note 4). Under the Utilities’ tracking mechanisms, any actual costs determined in accordance with GAAP that are over/under amounts allowed in rates are charged/credited to a regulatory asset/liability. The regulatory asset/liability for each utility will then be amortized over five years beginning with the respective utility’s next rate case. Accordingly, all retirement benefit expenses (except for executive life and nonqualified pension plan expenses, which amounted to $1.0 million and $0.9 million in 2025 and 2024, respectively) determined in accordance with GAAP will be recovered.
Under the tracking mechanisms, amounts that would otherwise be recorded in AOCI (excluding amounts for executive life and nonqualified pension plans), net of taxes, as well as other pension and OPEB charges, are allowed to be reclassified as a regulatory asset, as those costs will be recovered in rates through the NPPC and NPBC in the future. The Utilities have reclassified to a regulatory asset/(liability) charges for retirement benefits that would otherwise be recorded in AOCI (amounting to the elimination of a potential adjustment to AOCI of $(100.2) million pretax and $(85.8) million pretax for 2025 and 2024, respectively).
Under the pension tracking mechanism, the Utilities are required to make contributions to the pension trust in the amount of the actuarially calculated NPPC, except when limited by the ERISA minimum contribution requirements or the maximum contributions imposed by the Internal Revenue Code. Contributions in excess of the calculated NPPC are recorded in a separate regulatory asset.
The OPEB tracking mechanisms generally require the Utilities to make contributions to the OPEB trust in the amount of the actuarially calculated NPBC, (excluding amounts for executive life), except when limited by material, adverse consequences imposed by federal regulations. Future decisions in rate cases could further impact funding amounts.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Defined benefit pension and other postretirement benefit plans information. The changes in the obligations and assets of the Company’s and Utilities’ retirement benefit plans and the changes in AOCI (gross) for 2025 and 2024 and the funded status of these plans and amounts related to these plans reflected in the Company’s and Utilities’ consolidated balance sheets as of December 31, 2025 and 2024 were as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| 2025 | | 2024 |
| (in thousands) | Pension
benefits | | Other
benefits | | Pension
benefits | | Other
benefits |
| HEI consolidated | | | | | | | |
Benefit obligation, January 1- continuing operations | $ | 1,893,577 | | | $ | 131,903 | | | $ | 1,951,821 | | | $ | 142,909 | |
Benefit obligation, January 1- discontinued operations | — | | | — | | | 81,157 | | | 434 | |
| Benefit obligation, January 1 | 1,893,577 | | | 131,903 | | | 2,032,978 | | | 143,343 | |
| Service cost | 41,064 | | | 988 | | | 45,821 | | | 1,112 | |
| Interest cost | 107,502 | | | 7,291 | | | 101,882 | | | 7,365 | |
| Actuarial loss (gain) | 22,531 | | | (745) | | | (106,453) | | | (9,913) | |
| Participants contributions | — | | | 3,625 | | | — | | | 4,024 | |
| Benefits paid and expenses | (103,823) | | | (13,083) | | | (99,494) | | | (13,594) | |
Change in projected benefit obligations - discontinued operations | — | | | — | | | (81,157) | | | (434) | |
| | | | | | | |
| | | | | | | |
| Benefit obligation, December 31 | 1,960,851 | | | 129,979 | | | 1,893,577 | | | 131,903 | |
Fair value of plan assets, January 1 - continuing operations | 1,888,853 | | | 217,890 | | | 1,871,872 | | | 207,372 | |
Fair value of plan assets, January 1 - discontinued operations | — | | | — | | | 101,667 | | | — | |
| Fair value of plan assets, January 1 | 1,888,853 | | | 217,890 | | | 1,973,539 | | | 207,372 | |
| Actual return on plan assets | 243,337 | | | 32,782 | | | 105,938 | | | 19,438 | |
| Employer contributions | 11,573 | | | — | | | 8,778 | | | — | |
| Participants contributions | — | | | 3,625 | | | — | | | 4,024 | |
| Benefits paid and expenses | (102,067) | | | (12,394) | | | (97,735) | | | (12,944) | |
Change in plan assets - discontinued operations | — | | | — | | | (101,667) | | | — | |
| | | | | | | |
| | | | | | | |
| Fair value of plan assets, December 31 | 2,041,696 | | | 241,903 | | | 1,888,853 | | | 217,890 | |
| | | | | | | |
| | | | | | | |
| Accrued benefit asset (liability), December 31 | $ | 80,845 | | | $ | 111,924 | | | $ | (4,724) | | | $ | 85,987 | |
Defined benefit pension and other postretirement benefit plans asset | $ | 106,285 | | | $ | 112,926 | | | $ | 20,269 | | | $ | 87,066 | |
Other liabilities (short-term) | (1,793) | | | (1,002) | | | (1,780) | | | (1,079) | |
Defined benefit plans liability | (23,647) | | | — | | | (23,213) | | | — | |
| | | | | | | |
| | | | | | | |
| Accrued benefit asset (liability), December 31 | $ | 80,845 | | | $ | 111,924 | | | $ | (4,724) | | | $ | 85,987 | |
| AOCI debit/(credit), January 1 (excluding impact of PUC D&Os) | $ | (963) | | | $ | (61,979) | | | $ | 85,262 | | | $ | (49,618) | |
| | | | | | | |
| | | | | | | |
Recognized during year – net actuarial gain (loss) | (283) | | | 3,052 | | | (359) | | | 2,898 | |
Occurring during year – net actuarial gain | (85,398) | | | (19,486) | | | (73,969) | | | (15,401) | |
Adjustment from discontinued operations | — | | | — | | | (11,897) | | | 142 | |
AOCI credit before cumulative impact of PUC D&Os, December 31 | (86,644) | | | (78,413) | | | (963) | | | (61,979) | |
| Cumulative impact of PUC D&Os | 90,015 | | | 71,355 | | | 5,999 | | | 55,140 | |
| AOCI debit/(credit), December 31 | $ | 3,371 | | | $ | (7,058) | | | $ | 5,036 | | | $ | (6,839) | |
Net actuarial gain | $ | (86,644) | | | $ | (78,413) | | | $ | (963) | | | $ | (61,979) | |
| | | | | | | |
AOCI credit before cumulative impact of PUC D&Os, December 31 | (86,644) | | | (78,413) | | | (963) | | | (61,979) | |
| Cumulative impact of PUC D&Os | 90,015 | | | 71,355 | | | 5,999 | | | 55,140 | |
| AOCI debit/(credit), December 31 | 3,371 | | | (7,058) | | | 5,036 | | | (6,839) | |
| Income taxes (benefits) | (868) | | | 1,818 | | | (1,297) | | | 1,761 | |
| AOCI debit/(credit), net of taxes (benefits), December 31 | $ | 2,503 | | | $ | (5,240) | | | $ | 3,739 | | | $ | (5,078) | |
| | | | | | | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
| | | | | | | | | | | | | | | | | | | | | | | |
| 2025 | | 2024 |
| (in thousands) | Pension
benefits | | Other
benefits | | Pension
benefits | | Other
benefits |
| Hawaiian Electric consolidated | | | | | | | |
| Benefit obligation, January 1 | $ | 1,830,454 | | | $ | 126,088 | | | $ | 1,888,463 | | | $ | 136,572 | |
| Service cost | 40,086 | | | 976 | | | 44,669 | | | 1,096 | |
| Interest cost | 103,947 | | | 6,949 | | | 98,492 | | | 7,039 | |
Actuarial loss (gain) | 21,825 | | | (937) | | | (104,692) | | | (9,688) | |
| Participants contributions | — | | | 3,568 | | | — | | | 3,951 | |
| Benefits paid and expenses | (99,713) | | | (12,507) | | | (95,785) | | | (12,835) | |
| Transfers | — | | | — | | | (693) | | | (47) | |
| Benefit obligation, December 31 | 1,896,599 | | | 124,137 | | | 1,830,454 | | | 126,088 | |
| Fair value of plan assets, January 1 | 1,843,676 | | | 214,743 | | | 1,827,285 | | | 204,140 | |
| Actual return on plan assets | 237,568 | | | 32,331 | | | 103,457 | | | 19,299 | |
| Employer contributions | 11,439 | | | — | | | 8,733 | | | — | |
| Participants contributions | — | | | 3,568 | | | — | | | 3,951 | |
| Benefits paid and expenses | (99,199) | | | (12,098) | | | (95,261) | | | (12,600) | |
| Other | — | | | — | | | (538) | | | (47) | |
| Fair value of plan assets, December 31 | 1,993,484 | | | 238,544 | | | 1,843,676 | | | 214,743 | |
Accrued benefit asset, December 31 | $ | 96,885 | | | $ | 114,407 | | | $ | 13,222 | | | $ | 88,655 | |
Defined benefit pension and other postretirement benefit plans asset | $ | 104,308 | | | $ | 115,169 | | | $ | 20,164 | | | $ | 88,655 | |
| Other liabilities (short-term) | (514) | | | (762) | | | (514) | | | — | |
Defined benefit plans liability | (6,909) | | | — | | | (6,428) | | | — | |
Accrued benefit asset, December 31 | $ | 96,885 | | | $ | 114,407 | | | $ | 13,222 | | | $ | 88,655 | |
| AOCI debit/(credit), January 1 (excluding impact of PUC D&Os) | $ | (3,975) | | | $ | (60,915) | | | $ | 69,339 | | | $ | (48,510) | |
Recognized during year – net actuarial gain (loss) | (108) | | | 3,047 | | | (99) | | | 2,840 | |
Occurring during year – net actuarial gain | (83,555) | | | (19,419) | | | (73,215) | | | (15,245) | |
AOCI credit before cumulative impact of PUC D&Os, December 31 | (87,638) | | | (77,287) | | | (3,975) | | | (60,915) | |
| Cumulative impact of PUC D&Os | 90,015 | | | 71,355 | | | 5,999 | | | 55,140 | |
| AOCI debit/(credit), December 31 | $ | 2,377 | | | $ | (5,932) | | | $ | 2,024 | | | $ | (5,775) | |
Net actuarial gain | $ | (87,638) | | | $ | (77,287) | | | $ | (3,975) | | | $ | (60,915) | |
| | | | | | | |
AOCI credit before cumulative impact of PUC D&Os, December 31 | (87,638) | | | (77,287) | | | (3,975) | | | (60,915) | |
| Cumulative impact of PUC D&Os | 90,015 | | | 71,355 | | | 5,999 | | | 55,140 | |
| AOCI debit/(credit), December 31 | 2,377 | | | (5,932) | | | 2,024 | | | (5,775) | |
| Income taxes (benefits) | (612) | | | 1,527 | | | (522) | | | 1,487 | |
| AOCI debit/(credit), net of taxes (benefits), December 31 | $ | 1,765 | | | $ | (4,405) | | | $ | 1,502 | | | $ | (4,288) | |
Pension benefits. In 2025, the actual return on plan assets, offset by actuarial loss due to demographic experience, including any assumption changes, further improved the funded position.
In 2024, actuarial gains due to demographic experience, including any assumption changes, improved the funded position, offset by losses on the actual return on plan assets. The most impactful assumption change was the increase in the discount rate used to measure PBO compared to the prior year. Investment returns that were less than assumed partially offset the gain from the discount rate change.
Other benefits. In 2025, the actual return on plan assets and the actuarial gains due to demographic experience, including any assumption changes, further improved the funded position. The most impactful assumption change was the expected future claims costs increasing less than expected.
In 2024, actuarial gains due to demographic experience, including any assumption changes, improved the funded position. The most impactful assumption change was the increase in the discount rate used to measure APBO compared to the prior year. In addition, investment returns that were better than expected, medical claims increases that were less than expected, and demographic experience further improved the funded position.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The dates used to determine retirement benefit measurements for the defined benefit plans and OPEB were December 31 of 2025, 2024 and 2023.
The Company uses the fair value method for the plans’ fixed income securities in the calculation of the expected return on plan assets component of NPPC and NPBC. The remaining plan assets continue to use the calculated market-related value methodology. The Company considers the fair value approach to be preferable for its fixed-income securities portfolio because it results in a current reflection of the changes in the value of plan assets in a way similar to the obligations it is intended to hedge. Amounts related to the Utilities were reflected as adjustments to regulatory assets as appropriate, consistent with the expected regulatory treatment as described in the following paragraph.
The Utilities have implemented pension and OPEB tracking mechanisms under which all of their retirement benefit expenses (except for executive life and nonqualified pension plan expenses) determined in accordance with GAAP are recovered over time. Under the tracking mechanisms, any actual costs determined in accordance with GAAP that are over/under amounts allowed in rates are charged/credited to a regulatory asset/liability. The regulatory asset/liability for each utility will then be amortized over five years beginning with the respective utility’s next rate case.
A primary goal of the plans is to achieve long-term asset growth sufficient to pay future benefit obligations at a reasonable level of risk. The investment policy target for defined benefit pension and OPEB plans of HEI and the Utilities reflects the philosophy that long-term growth can best be achieved by prudent investments in equity securities while balancing overall fund and pension liability volatility by an appropriate allocation to fixed income securities. To reduce the level of portfolio risk and volatility in returns, efforts have been made to diversify the plans’ investments by asset class, geographic region, market capitalization and investment style.
The asset allocation of defined benefit retirement plans to equity and fixed income securities (excluding cash) and related investment policy targets and ranges were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Pension benefits | | Other benefits |
| | | | | Investment policy | | | | | | Investment policy |
| December 31, | 2025 | | 2024 | | Target | | Range1 | | 2025 | | 2024 | | Target | | Range1 |
| Assets held by category | | | | | | | | | | | | | | | |
| U.S. equity securities | 47 | % | | 48 | % | | 46 | % | | 8-100% | | 53 | % | | 54 | % | | 54 | % | | 14-100% |
| Non-U.S equity securities | 19 | | | 19 | | | 17 | | | 0-37% | | 22 | | | 21 | | | 20 | | | 0-40% |
| Fixed income securities | 30 | | | 30 | | | 32 | | | 11-51% | | 25 | | | 25 | | | 26 | | | 6-46% |
| Private equity | 4 | | | 3 | | | 5 | | | 0-10% | | — | | | — | | | — | | | — |
| | 100 | % | | 100 | % | | 100 | % | | | | 100 | % | | 100 | % | | 100 | % | | |
1 As of December 31, 2025 and 2024, the broad range for equity securities is a minimum of 43% and a maximum of 83%, for pension benefits and a minimum of 54% and maximum of 94%, for other benefits.
The fair values of the investments shown in the tables below represent the Company’s best estimates of the amounts that would be received upon sale of those assets in an orderly transaction between market participants at that date. Those fair value measurements maximize the use of observable inputs. However, in situations where there is little, if any, market activity for the asset at the measurement date, the fair value measurement reflects the Company’s judgments about the assumptions that market participants would use in pricing the asset. Those judgments are developed by the Company based on the best information available in the circumstances.
The Company used the following valuation methodologies for assets measured at fair value. There have been no changes in the methodologies used at December 31, 2025 and 2024.
Equity securities, equity index fund, exchange-traded funds and U.S. Treasury fixed income securities (Level 1). Equity securities, equity index fund, exchange-traded funds and U.S. Treasury fixed income securities are valued at the closing price reported on the active market on which the individual securities or funds are traded.
Fixed income securities (Level 2). Fixed income, other than those issued by the U.S. Treasury, are valued based on yields currently available on comparable securities of issuers with similar credit ratings.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Assets held in various trusts for the retirement benefit plans are measured at fair value on a recurring basis and were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Pension benefits | | Other benefits |
| | | | Fair value measurements using | | | | Fair value measurements using |
| (in millions) | December 31 | | Quoted prices in active markets for identical assets
(Level 1) | | Significant other observable inputs
(Level 2) | | | | December 31 | | Quoted prices in active markets for identical assets
(Level 1) | | Significant other observable inputs
(Level 2) | | |
| 2025 | | | | | | | | | | | | | | | |
| U.S. equity securities | $ | 437 | | | $ | 437 | | | $ | — | | | | | $ | 49 | | | $ | 49 | | | $ | — | | | |
| Non-U.S. equity securities | 23 | | | 23 | | | — | | | | | 3 | | | 3 | | | — | | | |
U.S. equity index and exchange-traded funds (ETFs) | 487 | | | 487 | | | — | | | | | 69 | | | 69 | | | — | | | |
Non-U.S. equity index and ETFs | 356 | | | 356 | | | — | | | | | 48 | | | 48 | | | — | | | |
Total equity investments | 1,303 | | | 1,303 | | | — | | | | | 169 | | | 169 | | | — | | | |
| | | | | | | | | | | | | | | |
Fixed income securities | 596 | | | 397 | | | 199 | | | | | 56 | | | 24 | | | 32 | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Private equity at net asset value (NAV) | 78 | | | — | | | — | | | | | 1 | | | — | | | — | | | |
| Cash equivalents, fund and at NAV | 62 | | | — | | | — | | | | | 15 | | | — | | | — | | | |
| Total | 2,039 | | | $ | 1,700 | | | $ | 199 | | | | | 241 | | | $ | 193 | | | $ | 32 | | | |
Cash, receivables and payables, net | 3 | | | | | | | | | 1 | | | | | | | |
Fair value of plan assets | $ | 2,042 | | | | | | | | | $ | 242 | | | | | | | |
| 2024 | | | | | | | | | | | | | | | |
| U.S. equity securities | $ | 403 | | | $ | 403 | | | $ | — | | | | | $ | 48 | | | $ | 48 | | | $ | — | | | |
| Non-U.S. equity securities | 20 | | | 20 | | | — | | | | | 2 | | | 2 | | | — | | | |
U.S. equity index and ETFs | 484 | | | 484 | | | — | | | | | 63 | | | 63 | | | — | | | |
| Non-U.S. equity index and ETFs | 326 | | | 326 | | | — | | | | | 41 | | | 41 | | | — | | | |
Total equity investments | 1,233 | | | 1,233 | | | — | | | | | 154 | | | 154 | | | — | | | |
Fixed income securities | 546 | | | 401 | | | 145 | | | | | 52 | | | 22 | | | 30 | | | |
Private equity at NAV | 63 | | | — | | | — | | | | | 1 | | | — | | | — | | | |
| Cash equivalents, fund and at NAV | 45 | | | — | | | — | | | | | 10 | | | 10 | | | — | | | |
| Total | 1,887 | | | $ | 1,634 | | | $ | 145 | | | | | 217 | | | $ | 186 | | | $ | 30 | | | |
Cash, receivables and payables, net | 2 | | | | | | | | | 1 | | | | | | | |
Fair value of plan assets | $ | 1,889 | | | | | | | | | $ | 218 | | | | | | | |
The fair value of investments measured at NAV presented in the table above is intended to permit reconciliation to the fair value of plan assets.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The following table represents assets measured at NAV.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Pension benefits | | Other benefits |
| Measured at NAV | December 31 | | Redemption frequency | | Redemption notice period | | December 31 | | Redemption frequency | | Redemption notice period |
| (in millions) | | | | | | | | | | | |
| 2025 | | | | | | | | | | | |
Private equity (a) | $ | 78 | | | NA | | NA | | $ | 1 | | | NA | | NA |
Cash equivalents (b) | 62 | | | Daily | | 0-1 day | | 15 | | | Daily | | 0-1 day |
| $ | 140 | | | | | | | $ | 16 | | | | | |
| 2024 | | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Private equity (a) | 63 | | | NA | | NA | | 1 | | | NA | | NA |
Cash equivalents (b) | 45 | | | Daily | | 0-1 day | | — | | | Daily | | 0-1 day |
| $ | 108 | | | | | | | $ | 1 | | | | | |
NA Not applicable
None of the investments presented in the tables above have unfunded commitments, other than private equity disclosed in (a) below.
(a) Represents investment in a private equity fund. The fund is valued as reported by the General Partner, based on the valuation of the underlying investments. As of December 31, 2025 and 2024, the unfunded commitment of the private equity fund was $107 million and $122 million, respectively. The fund does not allow redemptions but may be dissolved with six months written notice. The termination date of the fund is November 1, 2100, unless dissolved earlier.
(b) Represents investments in cash equivalent funds. These funds invest primarily in U.S. government or its agency securities, repurchase agreements collateralized by securities issued by U.S. government or its agencies and or cash, and cash.
The following weighted-average assumptions were used in the accounting for the plans: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Pension benefits | | Other benefits |
| December 31 | 2025 | | 2024 | | 2023 | | 2025 | | 2024 | | 2023 |
| Benefit obligation | | | | | | | | | | | |
Discount rate | 5.78 | % | | 5.77 | % | | 5.35 | % | | 5.67 | % | | 5.72 | % | | 5.39 | % |
| Rate of compensation increase | 3.5 | | | 3.5 | | | 3.5 | | | NA | | NA | | NA |
| Net periodic pension/benefit cost (years ended) | | | | | | | | | | | |
Discount rate | 5.77 | | | 5.35 | | | 5.67 | | | 5.72 | | | 5.39 | | | 5.66 | |
Expected return on plan assets (gross return) | 7.25 | | | 7.25 | | | 7.25 | | | 7.25 | | | 7.25 | | | 7.25 | |
Rate of compensation increase1 | 3.5 | | | 3.5 | | | 3.5 | | | NA | | NA | | NA |
NA Not applicable
1 HEI and the Utilities use a graded rate of compensation increase assumption based on age. The rate provided above is an average across all future years of service for the current population.
The Company and the Utilities based their selection of an assumed discount rate for 2026 NPPC and NPBC and December 31, 2025 disclosure on a cash flow matching analysis that utilized bond information provided by Bloomberg for all high quality bonds (generally rated Aa or better) as of December 31, 2025. In selecting the expected rate of return on plan assets for 2026 NPPC and NPBC, HEI and the Utilities considered economic forecasts for the types of investments held by the plans (primarily equity and fixed income investments), the plans’ asset allocations, industry and corporate surveys and the past performance of the plans’ assets in selecting 7.25%. For 2025, retirement benefit plans’ assets of the Company and the Utilities both had a net gain of 14.0%.
As of December 31, 2025, the assumed health care trend rates for 2026 and future years were as follows: medical pre-65, 6.75% grading down to 5% for 2032 and thereafter; medical post-65, 6.25%, grading down to 5% for 2030 and thereafter; dental, 5%; and vision, 4%. As of December 31, 2024, the assumed health care trend rates for 2025 and future years were as follows: medical pre-65, 7% grading down to 5% for 2032 and thereafter; medical post-65, 6.5%, grading down to 5% for 2030 and thereafter; dental, 5%; and vision, 4%.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The components of NPPC and NPBC were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Pension benefits | | Other benefits |
| (in thousands) | 2025 | | 2024 | | 2023 | | 2025 | | 2024 | | 2023 |
| HEI consolidated | | | | | | | | | | | |
| Service cost | $ | 41,064 | | | $ | 45,821 | | | $ | 45,228 | | | $ | 988 | | | $ | 1,112 | | | $ | 1,430 | |
| Interest cost | 107,502 | | | 101,882 | | | 98,606 | | | 7,291 | | | 7,365 | | | 8,497 | |
| Expected return on plan assets | (135,408) | | | (138,422) | | | (135,189) | | | (14,042) | | | (13,950) | | | (13,648) | |
| | | | | | | | | | | |
Amortization of net prior service gain | — | | | — | | | — | | | — | | | — | | | (875) | |
Amortization of net actuarial losses (gains) | 283 | | | 359 | | | 182 | | | (3,053) | | | (2,898) | | | (1,865) | |
| Net periodic pension/benefit cost | 13,441 | | | 9,640 | | | 8,827 | | | (8,816) | | | (8,371) | | | (6,461) | |
| Impact of PUC D&Os | 67,731 | | | 71,448 | | | 71,905 | | | 8,250 | | | 7,769 | | | 5,846 | |
Net periodic pension/benefit cost (adjusted for impact of PUC D&Os) | $ | 81,172 | | | $ | 81,088 | | | $ | 80,732 | | | $ | (566) | | | $ | (602) | | | $ | (615) | |
Hawaiian Electric consolidated | | | | | | | | | | | |
Service cost | $ | 40,086 | | | $ | 44,669 | | | $ | 44,143 | | | $ | 976 | | | $ | 1,096 | | | $ | 1,415 | |
Interest cost | 103,947 | | | 98,492 | | | 95,351 | | | 6,949 | | | 7,039 | | | 8,143 | |
Expected return on plan assets | (132,188) | | | (135,095) | | | (131,962) | | | (13,849) | | | (13,742) | | | (13,442) | |
| | | | | | | | | | | |
Amortization of net prior service gain | — | | | — | | | — | | | — | | | — | | | (872) | |
Amortization of net actuarial losses (gains) | 108 | | | 99 | | | 28 | | | (3,047) | | | (2,840) | | | (1,827) | |
| Net periodic pension/benefit cost | 11,953 | | | 8,165 | | | 7,560 | | | (8,971) | | | (8,447) | | | (6,583) | |
Impact of PUC D&Os | 67,731 | | | 71,448 | | | 71,905 | | | 8,250 | | | 7,769 | | | 5,846 | |
Net periodic pension/benefit cost (adjusted for impact of PUC D&Os) | $ | 79,684 | | | $ | 79,613 | | | $ | 79,465 | | | $ | (721) | | | $ | (678) | | | $ | (737) | |
The Company recorded pension expense of $47 million, $47 million and $43 million in 2025, 2024 and 2023, respectively, and OPEB income of $(0.1) million, $(0.2) million and $(0.1) million in 2025, 2024 and 2023, respectively, and charged the remaining amounts primarily to electric utility plant. The Utilities recorded pension expense of $45 million, $45 million and $42 million, respectively, and OPEB income of $(0.3) million in each of 2025, 2024 and 2023, and charged the remaining amounts primarily to electric utility plant.
Additional information on the defined benefit pension plans’ accumulated benefit obligations (ABOs), which do not consider projected pay increases (unlike the PBOs shown in the table above), and pension plans with ABOs and PBOs in excess of plan assets as of December 31, 2025 and 2024 were as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| HEI consolidated | | Hawaiian Electric consolidated |
| December 31 | 2025 | | 2024 | | 2025 | | 2024 |
| (in billions) | | | | | | | |
Defined benefit pension plans - ABOs1 | $ | 1.8 | | | $ | 1.7 | | | $ | 1.7 | | | $ | 1.7 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
Defined benefit pension plans with PBOs in excess of plan assets2 | | | | | | | |
PBOs | — | | | 1.9 | | | — | | | — | |
Fair value of plan assets | — | | | 1.9 | | | — | | | — | |
1 There are no defined benefit pension plans with ABOs in excess of fair value of plan assets.
2 As of December 31, 2025, HEI’s defined benefit pension plans do not have PBOs in excess of fair value of plan assets. As of December 31, 2025 and 2024, Hawaiian Electric’s defined benefit pension plans do not have PBOs in excess of fair value of plan assets.
HEI consolidated. The Company estimates that the cash funding for the qualified defined benefit pension plans in 2026 will be $13 million, which will fully satisfy the ERISA minimum required contribution, the requirements of the Utilities’ pension tracking mechanisms and the plan’s funding policy. The Company’s current estimate of contributions to its other postretirement benefit plans in 2026 is nil.
As of December 31, 2025, the benefits expected to be paid under all retirement benefit plans in 2026, 2027, 2028, 2029, 2030 and 2031 through 2035 amount to $116 million, $119 million, $123 million, $126 million, $130 million and $700 million, respectively.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Hawaiian Electric consolidated. The Utilities estimate that the cash funding for the qualified defined benefit pension plan in 2026 will be $13 million, which will fully satisfy the ERISA minimum required contribution, the requirements of the pension tracking mechanisms and the Plan’s funding policy. The Utilities’ current estimate of contributions to its other postretirement benefit plans in 2026 is nil.
As of December 31, 2025, the benefits expected to be paid under all retirement benefit plans in 2026, 2027, 2028, 2029, 2030 and 2031 through 2035 amounted to $111 million, $115 million, $118 million, $121 million, $125 million and $675 million, respectively.
Defined contribution plans information. For 2025, 2024 and 2023, the Company’s expense and cash contributions for its defined contribution plans under the HEIRSP was $9 million, $8 million and $6 million, respectively. Included in the 2025, 2024 and 2023 amounts are non-elective employer contributions for the Utilities and HEI employees first hired on or after January 1, 2022, equal to 10% of those new employees’ annual compensation. For 2025, 2024 and 2023 the Utilities’ expense and cash contributions for its defined contribution plan under the HEIRSP was $8 million, $7 million and $6 million, respectively.
| | |
Note 12 · Share-based compensation |
As a result of the ASB sale transaction on December 31, 2024, previously recorded share-based awards to ASB participants under the EIP (defined below) were cancelled. Unless otherwise noted, amounts in the share-based compensation footnote include discontinued operations.
Under the 2010 Equity and Incentive Plan, as amended and restated effective February 9, 2024 (EIP), HEI can issue shares of common stock as incentive compensation to nonemployee directors and selected employees and consultants in the form of stock options, stock appreciation rights, restricted shares, restricted stock units, performance shares and other share-based and cash-based awards.
As of December 31, 2025, approximately 2.5 million shares remained available for future issuance under the terms of the EIP, assuming recycling of shares withheld to satisfy statutory tax liabilities relating to EIP awards, including an estimated 1.2 million shares that could be issued upon the vesting of outstanding restricted stock units and the achievement of performance goals for awards outstanding under long-term incentive plans (assuming that such performance goals are achieved at maximum levels).
Restricted stock units awarded under the EIP in 2023 will vest and be issued in unrestricted stock in three equal annual increments on the anniversaries of the grant date and are forfeited to the extent they have not become vested for terminations of employment during the vesting period, except that pro-rata vesting is provided for terminations due to death, disability and retirement. Restricted stock units expense has been recognized in accordance with the fair-value-based measurement method of accounting. Dividend equivalent rights are accrued and are paid at the end of the restriction period when the associated restricted stock units vest.
Stock performance awards granted under the 2025-27, 2024-26 and 2023-25 long-term incentive plans (LTIP) entitle the grantee to shares of common stock with dividend equivalent rights once service conditions and performance conditions are satisfied at the end of the three-year performance period. LTIP awards are forfeited for terminations of employment during the performance period, except that pro-rata participation is provided for terminations due to death, disability and retirement based upon completed months of service after a minimum of 12 months of service in the performance period. Compensation expense for the stock performance awards portion of the LTIP has been recognized in accordance with the fair-value-based measurement method of accounting for performance shares.
Under the 2011 Nonemployee Director Stock Plan (2011 Director Plan), HEI can issue shares of common stock as compensation to nonemployee directors of HEI and its principal subsidiaries. As of December 31, 2025, there were 41,964 shares remaining available for future issuance under the 2011 Director Plan. After all of the shares remaining under the 2011 Director Plan have been issued or reserved for issuance, nonemployee director grants of common stock will be made under the EIP, which was amended in 2024 to provide for nonemployee director grants.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Share-based compensation expense and the related income tax benefit from continuing operations were as follows:
| | | | | | | | | | | | | | | | | |
| (in millions) | 2025 | | 2024 | | 2023 |
| HEI consolidated | | | | | |
Share-based compensation expense1 | $ | 3.4 | | | $ | 3.6 | | | $ | 6.8 | |
| Income tax benefit | 0.5 | | | 0.3 | | | 1.4 | |
| Hawaiian Electric consolidated | | | | | |
Share-based compensation expense1 | 1.9 | | | 1.8 | | | 3.3 | |
| Income tax benefit | 0.4 | | | 0.2 | | | 0.8 | |
1For 2025, 2024 and 2023, the Company has not capitalized any share-based compensation.
Stock awards. HEI granted HEI common stock to nonemployee directors under the 2011 Director Plan as follows:
| | | | | | | | | | | | | | | | | |
| (dollars in millions) | 2025 | | 2024 | | 2023 |
| Shares granted | 126,213 | | | — | | | 40,450 | |
| Fair value | $ | 1.3 | | | $ | — | | | $ | 1.5 | |
| Income tax benefit | 0.3 | | | — | | | 0.4 | |
The number of shares issued to each nonemployee director of HEI and its principal subsidiaries is determined based on the closing price of HEI common stock on the grant date.
Restricted stock units. Information about HEI’s grants of restricted stock units was as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 2025 | | 2024 | | 2023 |
| | Shares | | (1) | | Shares | | (1) | | Shares | | (1) |
| Outstanding, January 1 | 65,628 | | | $ | 42.09 | | | 189,024 | | | $ | 41.23 | | | 182,528 | | | $ | 39.75 | |
| Granted | — | | | — | | | — | | | — | | | 100,088 | | | 42.41 | |
| Vested | (42,452) | | | 41.92 | | | (98,084) | | | 40.43 | | | (84,794) | | | 39.41 | |
Cancelled (2) | — | | | — | | | (24,241) | | | 42.06 | | | — | | | — | |
| Forfeited | (1,004) | | | 42.41 | | | (1,071) | | | 41.97 | | | (8,798) | | | 41.63 | |
| Outstanding, December 31 | 22,172 | | | $ | 42.41 | | | 65,628 | | | $ | 42.09 | | | 189,024 | | | $ | 41.23 | |
Total weighted-average grant-date fair value of shares granted (in millions) | $ | — | | | | | $ | — | | | | | $ | 4.2 | | | |
(1)Weighted-average grant-date fair value per share based on the average price of HEI common stock on the date of grant.
(2)Represents activity of discontinued operations.
For 2025, 2024 and 2023, total restricted stock units and related dividends that vested had a fair value of $0.5 million, $1.4 million and $3.7 million, respectively, and the related tax benefits were $0.1 million, $0.3 million and $0.8 million, respectively.
As of December 31, 2025, there was $0.1 million of total unrecognized compensation cost related to the nonvested restricted stock units. The cost is expected to be recognized over a weighted-average period of 0.1 years.
Long-term incentive plan payable in stock. The 2023-25, 2024-26 and 2025-27 LTIPs provide for performance awards under the EIP of shares of HEI common stock based on the satisfaction of performance goals. The number of shares of HEI common stock that may be awarded is fixed on the date the grants are made, subject to the achievement of specified performance levels and calculated dividend equivalents. The potential payout varies from 0% to 220% of the number of target shares, depending on the achievement of the goals. The 2023-25 and 2024-26 LTIP performance goals include a market condition goal. The market condition goal is based on HEI’s total shareholder return (TSR) compared to the Peer Group (the Company's compensation peer group consisting of companies in the EEI Index and approved by the Company's Compensation and Human Capital Management Committee), in each case over the relevant three-year period. The other performance condition goals relate to cumulative EPS and return on average common equity (ROACE) and Hawaiian Electric’s net income growth, ROACE, carbon emissions reduction, credit rating, public safety, funds from operations to total adjusted debt ratio and customer experience. The 2025-27 LTIP includes other performance goals (described above) and a relative TSR payout modifier, which may adjust the payout shares based on the relative TSR result. The relative TSR modifier is based on HEI’s TSR compared to the Peer Group.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
LTIP linked to TSR (payout modifier for 2025-27 LTIP and performance goal). Information about HEI’s LTIP grants linked to TSR was as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 2025 | | 2024 | | 2023 |
| | Shares | | (1) | | Shares | | (1) | | Shares | | (1) |
| Outstanding, January 1 | 98,441 | | | $ | 31.36 | | | 76,477 | | | $ | 50.11 | | | 71,574 | | | $ | 47.67 | |
| Granted | 462,313 | | | 11.25 | | | 62,152 | | | 17.28 | | | 27,123 | | | 55.98 | |
| Vested (issued or unissued and cancelled) | (17,287) | | | 54.92 | | | (28,577) | | | 41.12 | | | (18,691) | | | 48.62 | |
Cancelled (2) | — | | | — | | | (10,821) | | | 55.46 | | | — | | | — | |
| Forfeited | — | | | — | | | (790) | | | 55.64 | | | (3,529) | | | 53.72 | |
| Outstanding, December 31 | 543,467 | | | $ | 13.50 | | | 98,441 | | | $ | 31.36 | | | 76,477 | | | $ | 50.11 | |
Total weighted-average grant-date fair value of shares granted (in millions) | $ | 5.2 | | | | | $ | 1.1 | | | | | $ | 1.5 | | | |
(1)Weighted-average grant-date fair value per share determined using a Monte Carlo simulation model.
(2)Represents activity of discontinued operations.
The grant date fair values of the LTIP awards linked to TSR were determined using a Monte Carlo simulation model utilizing actual information for the common shares of HEI and the Peer Group for the period from the beginning of the performance period to the grant date and estimated future stock volatility of HEI and the Peer Group over the remaining three-year performance period. The expected stock volatility assumptions for HEI and the Peer Group were based on the three-year historic stock volatility. A dividend assumption is not required for the Monte Carlo simulation because the grant payout includes dividend equivalents and projected returns include the value of reinvested dividends.
The following table summarizes the assumptions used to determine the fair value of the LTIP awards linked to TSR and the resulting fair value of LTIP awards granted:
| | | | | | | | | | | | | | | | | |
| | 2025 | | 2024 | | 2023 |
| Risk-free interest rate | 4.37 | % | | 4.25 | % | | 4.19 | % |
| Expected life in years | 3 | | 3 | | 3 |
| Expected volatility | 64.7 | % | | 52.5 | % | | 33.1 | % |
| Range of expected volatility for Peer Group | 15.3% to 64.7% | | 12.3% to 52.5% | | 28.7% to 38.8% |
Grant date fair value (per share) (HEI) | $ | 11.39 | | | $ | 17.28 | | | $ | 55.98 | |
Grant date fair value (per share) (Hawaiian Electric) | $ | 11.12 | | | $ | 17.28 | | | $ | 55.98 | |
There were no share-based LTIP awards linked to TSR with a vesting date in 2025, 2024 and 2023.
As of December 31, 2025, there was $3.8 million of total unrecognized compensation cost related to the nonvested performance awards payable in shares linked to TSR. The cost is expected to be recognized over a weighted-average period of 1.9 years.
LTIP awards linked to other performance conditions. Information about HEI’s LTIP awards payable in shares linked to other performance conditions was as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2025 | | 2024 | | 2023 |
| | Shares | | (1) | | Shares | | (1) | | Shares | | (1) |
| Outstanding, January 1 | 438,967 | | | $ | 18.17 | | | 327,085 | | | $ | 39.44 | | | 309,589 | | | $ | 39.50 | |
| Granted | — | | | — | | | 362,963 | | | 13.09 | | | 108,499 | | | 42.41 | |
| Vested | — | | | — | | | (113,118) | | | 34.93 | | | (62,778) | | | 48.07 | |
Increase above target/(cancelled) due to performance | (76,004) | | | 42.41 | | | (91,521) | | | 41.31 | | | (13,153) | | | 36.59 | |
Cancelled (2) | — | | | — | | | (43,277) | | | 41.86 | | | — | | | — | |
| Forfeited | — | | | — | | | (3,165) | | | 42.06 | | | (15,072) | | | 42.19 | |
| Outstanding, December 31 | 362,963 | | | $ | 13.09 | | | 438,967 | | | $ | 18.17 | | | 327,085 | | | $ | 39.44 | |
Total weighted-average grant-date fair value of shares granted (at target performance levels) (in millions) | $ | — | | | | | $ | 4.8 | | | | | $ | 4.6 | | | |
(1)Weighted-average grant-date fair value per share based on the average price of HEI common stock on the date of grant.
(2)Represents activity of discontinued operations.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
There were no share-based LTIP awards linked to other performance conditions with a vesting date in 2025. For 2024 and 2023, total vested LTIP awards linked to other performance conditions and related dividends had a fair value of $1.7 million and $2.9 million, respectively, and the related tax benefits were $0.3 million and $0.6 million, respectively.
As of December 31, 2025, there was $1.6 million of total unrecognized compensation cost related to the nonvested shares linked to performance conditions other than TSR. The cost is expected to be recognized over a weighted-average period of 1.0 year.
The Company adopted ASU 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” on a prospective basis beginning with the year ended December 31, 2025.
The following table presents required disclosure pursuant to ASU 2023-09 for the year ended December 31, 2025. The components of income taxes attributable to income (loss) from continuing operations were as follows:
| | | | | | | | | | | | | | |
| | HEI consolidated | | Hawaiian Electric consolidated |
Year ended December 31 | | 2025 | | 2025 |
| (in thousands) | | | | |
US Income from continuing operations before income tax expense | | $ | 166,929 | | | $ | 220,588 | |
| Current tax expense (benefit) | | | | |
| US federal | | $ | 44,092 | | | $ | 44,958 | |
| US state | | 7,186 | | | 10,317 | |
Total current tax expense | | $ | 51,278 | | | $ | 55,275 | |
| Deferred tax expense (benefit) | | | | |
| US federal | | (13,533) | | | (8,692) | |
| US federal deferred tax credits | | — | | | — | |
| US state | | 2,903 | | | 2,450 | |
| US state deferred tax credits | | — | | | — | |
Total deferred tax benefit | | $ | (10,630) | | | $ | (6,242) | |
Total income tax expense | | | | |
| US federal | | $ | 30,559 | | | $ | 36,266 | |
| US federal deferred tax credits | | — | | | — | |
| US state | | 10,089 | | | 12,767 | |
| US state deferred tax credits | | — | | | — | |
Total income tax expense | | $ | 40,648 | | | $ | 49,033 | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The following table presents the required disclosures prior to our adoption of ASU 2023-09. The components of income taxes attributable to income (loss) from continuing operations for common stock were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | HEI consolidated | | | | Hawaiian Electric consolidated |
| Years ended December 31 | | | | 2024 | | 2023 | | | | 2024 | | 2023 |
| (in thousands) | | | | | | | | | | | | |
| Federal | | | | | | | | | | | | |
| Current | | | | $ | 13,220 | | | $ | 22,206 | | | | | $ | 34,216 | | | $ | 40,365 | |
| Deferred | | | | (376,141) | | | 1,951 | | | | | (373,316) | | | (3,444) | |
Deferred tax credits, net | | | | — | | | 52 | | | | | — | | | 22 | |
| | | | | (362,921) | | | 24,209 | | | | | (339,100) | | | 36,943 | |
| State | | | | | | | | | | | | |
| Current | | | | 2,009 | | | 2,924 | | | | | 7,864 | | | 9,367 | |
| Deferred | | | | (110,050) | | | 7,401 | | | | | (108,311) | | | 4,883 | |
Deferred tax credits, net | | | | — | | | — | | | | | — | | | — | |
| | | | | (108,041) | | | 10,325 | | | | | (100,447) | | | 14,250 | |
| Total | | | | $ | (470,962) | | | $ | 34,534 | | | | | $ | (439,547) | | | $ | 51,193 | |
A reconciliation of the amount of income taxes computed at the federal statutory rate to the amount provided in the consolidated statements of income after the adoption of ASU 2023-09 is as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | HEI consolidated | | | | Hawaiian Electric consolidated |
Year ended December 31 | | | 2025 | | | | 2025 |
| | | Amount | | Percentage | | | | Amount | | Percentage |
($ in thousands) | | | | | | | | | | | |
| US federal statutory income tax rate | | | $ | 35,055 | | | 21.0 | % | | | | $ | 46,323 | | | 21.0 | % |
State of Hawaii income taxes, net of federal effect | | | 7,858 | | | 4.7 | % | | | | 9,917 | | | 4.5 | % |
Federal tax credits | | | | | | | | | | | |
Investment tax credits | | | 5,221 | | | 3.2 | % | | | | — | | | — | % |
Other federal tax credits | | | (87) | | | (0.1 | %) | | | | (87) | | | — | % |
| | | | | | | | | | | |
| Changes in valuation allowances | | | (633) | | | (0.4 | %) | | | | — | | | — | % |
| Nontaxable and nondeductible items | | | 1,549 | | | 0.9 | % | | | | 553 | | | 0.3 | % |
| Changes in unrecognized tax benefits | | | 18 | | | — | % | | | | 18 | | | — | % |
| Other Adjustments | | | | | | | | | | | |
| Net deferred tax asset (liability) adjustment related to the Tax Act | | | (5,565) | | | (3.2 | %) | | | | (5,565) | | | (2.6 | %) |
| Other | | | (2,768) | | | (1.7 | %) | | | | (2,126) | | | (1.0 | %) |
| | | | | | | | | | | |
| Total income taxes | | | $ | 40,648 | | | 24.4 | % | | | | $ | 49,033 | | | 22.2 | % |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
A reconciliation of the amount of income taxes computed at the federal statutory rate to the amount provided in the consolidated statements of income for years prior to the adoption of ASU 2023-09 is as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | HEI consolidated | | | | Hawaiian Electric consolidated |
| Years ended December 31 | | | 2024 | | 2023 | | | | 2024 | | 2023 |
| (in thousands) | | | | | | | | | | | |
| Amount at the federal statutory income tax rate | | | $ | (376,235) | | | $ | 38,283 | | | | | $ | (349,423) | | | $ | 51,899 | |
| Increase (decrease) resulting from: | | | | | | | | | | | |
State income taxes, net of federal income tax benefit | | | (85,483) | | | 7,989 | | | | | (79,487) | | | 11,097 | |
Net deferred tax asset (liability) adjustment related to the Tax Act | | | (6,200) | | | (7,316) | | | | | (6,200) | | | (7,316) | |
Tax credits, net | | | (2,987) | | | (2,251) | | | | | (2,987) | | | (2,251) | |
| Other, net | | | (57) | | | (2,171) | | | | | (1,450) | | | (2,236) | |
| Total | | | $ | (470,962) | | | $ | 34,534 | | | | | $ | (439,547) | | | $ | 51,193 | |
| Effective income tax rate (%) | | | 26.3 | | | 18.9 | | | | | 26.4 | | | 20.7 | |
The tax effects of book and tax basis differences that give rise to deferred tax assets and liabilities were as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| HEI consolidated | | Hawaiian Electric consolidated |
| December 31 | 2025 | | 2024 | | 2025 | | 2024 |
| (in thousands) | | | | | | | |
| Deferred tax assets | | | | | | | |
Wildfire tort-related claims | $ | 483,749 | | | $ | 483,749 | | | $ | 483,749 | | | $ | 483,749 | |
Regulatory liabilities, excluding amounts attributable to property, plant and equipment | 73,204 | | | 76,765 | | | 73,204 | | | 76,765 | |
Lease liabilities | 150,477 | | | 130,556 | | | 148,736 | | | 128,610 | |
| Retirement benefits | 61,819 | | | 45,879 | | | 57,077 | | | 40,568 | |
| Revenue taxes | 45,769 | | | 48,379 | | | 45,769 | | | 48,379 | |
| | | | | | | |
Capital loss carryforward | 66,068 | | | 66,430 | | | — | | | — | |
| | | | | | | |
Other1 | 36,015 | | | 35,827 | | | 23,384 | | | 22,387 | |
Total deferred income tax assets | 917,101 | | | 887,585 | | | 831,919 | | | 800,458 | |
Valuation allowances | (73,118) | | | (73,459) | | | — | | | — | |
Total deferred income tax assets, net | 843,983 | | | 814,126 | | | 831,919 | | | 800,458 | |
| Deferred tax liabilities | | | | | | | |
| Property, plant and equipment related | 545,969 | | | 542,109 | | | 541,279 | | | 532,257 | |
| | | | | | | |
Lease right-of-use assets | 150,400 | | | 130,483 | | | 148,736 | | | 128,610 | |
Regulatory assets, excluding amounts attributable to property, plant and equipment | 21,575 | | | 21,678 | | | 21,575 | | | 21,678 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| Other | 53,186 | | | 47,148 | | | 52,979 | | | 46,330 | |
Total deferred income tax liabilities | 771,130 | | | 741,418 | | | 764,569 | | | 728,875 | |
Net deferred income tax asset (liability) | $ | 72,853 | | | $ | 72,708 | | | $ | 67,350 | | | $ | 71,583 | |
1 As of December 31, 2025 and 2024, HEI consolidated has deferred tax assets of $2.0 million and $3.8 million, respectively, relating to the benefit of state tax credit carryforwards of $2.6 million and $5.2 million, respectively. These state tax credit carryforwards primarily relate to the West Loch PV project that do not expire.
The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences are deductible. Based upon historical taxable income and projections for future taxable income, management believes it is more likely than not the Company and the Utilities will realize substantially all of the benefits of the deferred tax assets, excluding the capital loss from the sale of ASB. As of December 31, 2025 and 2024, valuation allowances for deferred tax benefits were $73.1 million and $73.5 million, respectively, recorded on HEI consolidated related to the capital loss from the sale of ASB and the book/tax difference in equity basis of retained ASB stock. Since capital losses can only be offset against capital gains, the Company believes that it is more likely than not that the tax benefit from ASB's capital loss will not be realized. This is due to the lack of expected capital gains and no tax strategies in place to generate capital gains before the loss expires. As a result, a valuation allowance was established. The Utilities are included in the consolidated federal
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
and Hawaii income tax returns of HEI and are subject to the provisions of HEI’s tax sharing agreement, which determines each subsidiary’s (or subgroup’s) income tax return liabilities and refunds on a standalone basis as if it filed a separate return (or subgroup consolidated return).
The following is a reconciliation of the Company’s liability for unrecognized tax benefits for 2025, 2024 and 2023.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| HEI consolidated | | Hawaiian Electric consolidated |
| (in millions) | 2025 | | 2024 | | 2023 | | 2025 | | 2024 | | 2023 |
| Unrecognized tax benefits, January 1 | $ | 12.5 | | | $ | 27.7 | | | $ | 30.6 | | | $ | 5.2 | | | $ | 15.6 | | | $ | 11.7 | |
| Additions based on tax positions taken during the year | — | | | 0.7 | | | 0.5 | | | — | | | — | | | 0.3 | |
| Reductions based on tax positions taken during the year | — | | | (0.1) | | | — | | | — | | | — | | | — | |
| Additions for tax positions of prior years | 0.2 | | | 1.5 | | | 3.8 | | | 0.2 | | | 1.5 | | | 3.7 | |
| Reductions for tax positions of prior years | (3.3) | | | (4.6) | | | (7.2) | | | — | | | (0.6) | | | (0.1) | |
| Lapses of statute of limitations | — | | | (1.9) | | | — | | | — | | | (0.5) | | | — | |
| Settlement | — | | | (10.8) | | | — | | | — | | | (10.8) | | | — | |
| Unrecognized tax benefits, December 31 | $ | 9.4 | | | $ | 12.5 | | | $ | 27.7 | | | $ | 5.4 | | | $ | 5.2 | | | $ | 15.6 | |
The Company currently has no open Internal Revenue Service income tax audits. The Company was notified on January 12, 2026, that its Hawaii State income tax returns for tax years 2022 through 2024 were selected for audit.
At December 31, 2025 and 2024, there were $5.4 million and $5.2 million of unrecognized tax benefits, respectively, that, if recognized, would affect the Company’s and Utilities’ annual effective tax rate.
Based on information currently available, the Company and the Utilities believe these accruals have adequately provided for potential income tax issues with federal and state tax authorities, and that the ultimate resolution of tax issues for all open tax periods will not have a material adverse effect on its results of operations, financial condition or liquidity.
Tax years post 2021 remains open under Federal and Hawaii statues of limitations.
HEI consolidated. The Company recognizes interest accrued related to unrecognized tax benefits in “Interest expense, net” and penalties, if any, in operating expenses. In 2025, 2024 and 2023, the Company recognized approximately $0.8 million, $0.3 million and $1.3 million, respectively, in interest expense. The Company had $3.1 million and $2.3 million of interest accrued as of December 31, 2025 and 2024, respectively.
Hawaiian Electric consolidated. The Utilities recognize interest accrued related to unrecognized tax benefits in “Interest expense and other charges, net” and penalties, if any, in operating expenses. In 2025, 2024 and 2023, the Utilities recognized approximately $0.1 million, $0.3 million and $0.1 million in interest expense, respectively. The Utilities had $0.2 million and $0.1 million of interest accrued as of December 31, 2025 and 2024, respectively.
As of December 31, 2025, the disclosures above present the Company’s and the Utilities’ accruals for potential tax liabilities, which involve management’s judgment regarding the likelihood of the benefits being sustained under governmental review.
Tax developments. In 2025, federal tax legislation, commonly referred to as the One Big Beautiful Bill Act, which includes a broad range of tax reform provisions, was signed into law in the United States on July 4, 2025. The Company recognized the impacts of the 2025 provisions including the timing of deductions for research and experimentation costs. The Company will continue to assess the legislation’s impact on future reporting periods but the legislation is not expected to have a material impact on the Company’s financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
| | | | | | | | | | | | | | | | | |
| Years ended December 31 | 2025 | | 2024 | | 2023 |
| (in millions) | | | | | |
| Supplemental disclosures of cash flow information | | | | | |
| HEI consolidated | | | | | |
| Activities from continuing operations: | | | | | |
| Interest paid to non-affiliates, net of amounts capitalized | $ | 102 | | | $ | 131 | | | $ | 109 | |
Interest paid on finance lease obligations | 40 | | | 31 | | | 6 | |
Federal income taxes paid, net of refunds | 40 | | | 32 | | | 24 | |
State of Hawaii income taxes refunded, net of payments (including refundable credits) | 3 | | | — | | | 1 | |
| | | | | |
| | | | | |
| Activities from discontinued operations: | | | | | |
| Interest paid to non-affiliates, net of amounts capitalized | — | | | 121 | | | 61 | |
Federal income taxes paid, net of refunds | — | | | 2 | | 4 |
| | | | | |
| Hawaiian Electric consolidated | | | | | |
| Interest paid to non-affiliates, net of amounts capitalized | 78 | | | 88 | | | 74 | |
Interest paid on finance lease obligations | 40 | | | 31 | | | 6 | |
| Federal income taxes paid, net of refunds | 40 | | | 52 | | | 30 | |
State of Hawaii income taxes paid, net of refunds (including refundable credits) | 2 | | | 7 | | | 7 | |
| | | | | |
| | | | | |
| Supplemental disclosures of noncash activities | | | | | |
| HEI consolidated | | | | | |
| Activities from continuing operations: | | | | | |
Property, plant and equipment-Unpaid invoices and accruals for capital expenditures, balance, end of period (investing) | 64 | | | 43 | | | 43 | |
Common stock dividends reinvested in HEI common stock (financing) 1 | — | | | — | | | 5 | |
| Right-of-use assets obtained in exchange for operating lease obligations (investing) | 12 | | | 2 | | | — | |
| | | | | |
| Debt assumed by buyer - sale of subsidiaries (financing) | 67 | | | — | | | — | |
Common stock issued (gross) for nonemployee director and executive/management compensation (financing)1 | 2 | | | 2 | | | 6 | |
| Right-of-use assets obtained in exchange for finance lease obligations (financing) | 92 | | 106 | | | 294 | |
| Activities from discontinued operations: | | | | | |
Sale of ASB (investing/financing) (see Note 5) | — | | | 508 | | | — | |
| | | | | |
| Loans transferred from held for investment to held for sale (investing) | — | | | 29 | | | 106 | |
| Transfer of retail repurchase agreements to deposit liabilities (financing) | — | | | — | | | 98 | |
| Obligations to fund low income housing investments, net (investing) | — | | | — | | | 18 | |
| | | | | |
Common stock issued (gross) for nonemployee director and executive/management compensation (financing)1 | — | | | 1 | | | 2 | |
| Right-of-use assets obtained in exchange for operating lease obligations (investing) | — | | | 5 | | | 1 | |
| Hawaiian Electric consolidated | | | | | |
| Electric utility property, plant and equipment-Unpaid invoices and accruals for capital expenditures, balance, end of period (investing) | 64 | | | 42 | | | 42 | |
| Right-of-use assets obtained in exchange for operating lease obligations (investing) | 12 | | | 2 | | | — | |
| Right-of-use assets obtained in exchange for finance lease obligations (financing) | 92 | | | 105 | | | 294 | |
| Capital contribution from parent of a membership interest in an unconsolidated affiliate (financing) | 287 | | | — | | | — | |
| HEI Consolidated and Hawaiian Electric consolidated | | | | | |
| | | | | |
| Estimated fair value of noncash contributions in aid of construction (investing) | 9 | | | 19 | | | 21 | |
| | | | | |
| | | | | |
| Reduction of long-term debt from funds previously transferred for repayment (financing) | 47 | | | — | | | — | |
1 The amounts shown represent the market value of common stock issued for nonemployee director and executive/management compensation and withheld to satisfy statutory tax liabilities.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
| | |
Note 15 · Regulatory restrictions on net assets |
The ability of Hawaiian Electric to pay dividends or make other distributions to HEI are subject to contractual and regulatory restrictions. Under the PUC Agreement, in the event that the consolidated common stock equity of the Utilities’ subsidiaries falls below 35% of the total capitalization of the Utilities (including the current maturities of long-term debt, but excluding short-term borrowings), the Utilities’ subsidiaries would, absent PUC approval, be restricted in their payment of cash dividends to 80% of the earnings available for the payment of dividends in the current fiscal year and preceding five years, less the amount of dividends paid during that period. The PUC Agreement also provides that the foregoing dividend restriction shall not be construed as relinquishing any right the PUC may have to review the dividend policies of the electric utility subsidiaries. As of December 31, 2025, the consolidated common stock equity of HEI’s electric utility subsidiaries was 42% of their total capitalization, which excludes finance lease liabilities resulting from power purchase agreements in the calculation of total capitalization, to align with their debt covenant requirements. As of December 31, 2025, Hawaiian Electric and its subsidiaries had common stock equity of $1.6 billion, of which approximately $1.2 billion was not available for transfer to HEI in the form of dividends, loans or advances without regulatory approval.
HEI and its subsidiaries are also subject to debt covenants and the terms of guarantees that could limit their respective abilities to pay dividends. The Company does not expect that the regulatory and contractual restrictions applicable to HEI and/or its subsidiaries will significantly affect the operations of HEI.
| | |
Note 16 · Significant group concentrations of credit risk |
Most of the Company’s business activity is with customers located in the State of Hawaii.
The Utilities are regulated operating electric public utilities engaged in the generation, purchase, transmission, distribution and sale of electricity on the islands of Oahu, Hawaii, Maui, Lanai and Molokai in the State of Hawaii. The Utilities provide the only electric public utility service on the islands they serve. The Utilities extend credit to customers, all of whom reside or conduct business in the State of Hawaii. See Note 4 for a discussion of the Utilities’ major customers. The International Brotherhood of Electrical Workers Local 1260 represents roughly half of the Utilities’ workforce covered by a collective bargaining agreement. On January 26, 2024, a three-year contract was ratified and is in effect from November 1, 2024 through October 31, 2027. The contract provides for a 3% general wage increase in each year of the three-year contract, double time for callouts, and a 1% incentive payment upon achievement of specified objectives.
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash, cash equivalents and restricted cash. The Company maintains its cash with what management believes to be high-credit quality financial institutions located in the U.S. Accounts are guaranteed by the Federal Deposit Insurance Corporation (FDIC) up to $250,000, under current regulations. At times, deposits held at these banks may exceed the insured limits. As of December 31, 2025, the Company, excluding the Utilities, held cash and cash equivalents and restricted cash of $0.4 million and $0.2 million, respectively, in FDIC insured accounts. As of December 31, 2025, the Utilities held cash and cash equivalents of $141 million in FDIC insured accounts. The Company has not experienced any losses in such accounts.
The Company also maintains cash in highly rated taxable and tax-exempt money market mutual funds located in the U.S. The company minimizes risk by investing in money market mutual funds which invest in securities issued by U.S. Government and Government-Sponsored Enterprises and the fund has a AAA rating. Risks associated with cash and cash equivalents are mitigated by the Company’s investment policy, which limits the Company’s investing of excess cash into relatively low risk securities that meet minimum credit quality standards that are defined in the policy. As of December 31, 2025, the Company, excluding the Utilities, held cash and cash equivalents and restricted cash of $15 million and $479 million, respectively, in money market mutual funds. As of December 31, 2025, the Utilities held cash and cash equivalents of $346 million in money market mutual funds.
| | |
Note 17 · Fair value measurements |
Fair value measurement and disclosure valuation methodology. The following are descriptions of the valuation methodologies used for assets and liabilities recorded at fair value and for estimating fair value for financial instruments not carried at fair value:
Money market mutual funds. The Company considers all liquid investments purchased with an initial maturity of three months or less and deposits in money market mutual funds that are readily convertible into cash to be cash equivalents. The carrying value of cash and cash equivalents approximates fair value due to the short-term nature of these instruments.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Short-term borrowings. The carrying amount of short-term borrowings approximated fair value because of the short maturity of these instruments.
Long-term debt. Fair value of fixed-rate long-term debt was obtained from third-party financial services providers based on the current rates offered for debt of the same or similar remaining maturities and from discounting the future cash flows using the current rates offered for debt of the same or similar risks, terms, and remaining maturities. The carrying amount of floating rate long-term debt approximated fair value because of the short-term interest reset periods. Long-term debt is classified in Level 2 of the valuation hierarchy.
Interest rate swaps. The Company measures its interest rate swaps at fair value. The fair values of the Company's interest rate swaps are based on the estimated amounts that the Company would receive or pay to terminate the contracts at the reporting date and are determined using interest rate pricing models and interest rate related observable inputs. The fair values of the Company's interest rate swaps are classified as a Level 2 measurements.
The sale of solar and BESS facilities (See Note 3) included variable interest rate debt assumed by the buyer as part of the transaction. As a result of the sale, the interest rate swap agreements that had been designated as cash flow hedges of interest payments were terminated. The derivatives had a notional amount of $28 million and a fair value of $1.0 million at termination. $0.8 million, net of taxes, was reclassified from other comprehensive income to earnings. The terminated swaps were previously classified as Level 2 instruments under the fair value hierarchy. Derivatives measured at fair value on a recurring basis were previously included in “Other noncurrent assets” and “Other noncurrent liabilities” in the Consolidated Balance Sheets.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The following table presents the carrying or notional amount, fair value and placement in the fair value hierarchy of the Company’s financial instruments.
| | | | | | | | | | | | | | | | | | | | | | | |
| | | Estimated fair value |
| (in thousands) | Carrying or notional
amount | | Quoted prices in active markets for identical assets
(Level 1) | | Significant other observable inputs
(Level 2) | | Total |
| December 31, 2025 | | | | | | | |
| Financial assets | | | | | | | |
| HEI consolidated | | | | | | | |
| Money market mutual funds | $ | 839,380 | | | $ | 839,380 | | | $ | — | | | $ | 839,380 | |
| | | | | | | |
| Hawaiian Electric consolidated | | | | | | | |
Money market mutual funds | 345,510 | | | 345,510 | | | — | | | 345,510 | |
| Financial liabilities | | | | | | | |
| HEI consolidated | | | | | | | |
| | | | | | | |
Long-term debt, net1 | 2,409,975 | | | — | | | 2,098,593 | | | 2,098,593 | |
| | | | | | | |
| Hawaiian Electric consolidated | | | | | | | |
| | | | | | | |
Long-term debt, net | 2,182,833 | | | — | | | 1,895,680 | | | 1,895,680 | |
| | | | | | | |
| December 31, 2024 | | | | | | | |
| Financial assets | | | | | | | |
| HEI consolidated | | | | | | | |
Money market mutual funds | $ | 1,162,259 | | | $ | 1,162,259 | | | $ | — | | | $ | 1,162,259 | |
Derivative assets2 | 29,312 | | | — | | | 1,629 | | | 1,629 | |
| Hawaiian Electric consolidated | | | | | | | |
Money market mutual funds | 115,599 | | | 115,599 | | | — | | | 115,599 | |
| Financial liabilities | | | | | | | |
| HEI consolidated | | | | | | | |
Short-term borrowings | 48,623 | | | — | | | 48,623 | | | 48,623 | |
Long-term debt, net | 2,799,558 | | | — | | | 2,196,403 | | | 2,196,403 | |
| | | | | | | |
| Hawaiian Electric consolidated | | | | | | | |
Short-term borrowings | 48,623 | | | — | | | 48,623 | | | 48,623 | |
Long-term debt, net | 1,901,214 | | | — | | | 1,446,316 | | | 1,446,316 | |
| | | | | | | |
1 Carrying or notional amount does not include $51.6 million related to Mahipapa long term debt, net which is included in liabilities held for sale as of December 31, 2025. See Note 3 for more information.
2 Amounts relate to derivatives which were included in Pacific Current’s Solar Asset Disposition. See Note 3 for more information.
Assets and liabilities measured at fair value on a recurring basis include money market mutual funds and derivative assets as included in the table above. Money market mutual funds are included in “Cash and cash equivalents” and “Restricted cash” in the Consolidated Balance Sheets. Derivatives assets are included in “Other noncurrent assets” in the Consolidated Balance Sheets.
There were no transfers of financial assets and liabilities between Level 1 and Level 2 of the fair value hierarchy during the years ended December 31, 2025 and 2024.