Hawaiian Electric Industries Q2 Earnings Call Highlights

Key Points

• Hawaiian Electric reported $123.2 million in Q2 net income, or $0.71 per share, boosted by a $153.9 million non-cash reduction in its Maui wildfire settlement liability. Excluding wildfire-related and other non-core items, core net income fell to $22.5 million from $35.4 million a year earlier.
• Utility earnings declined as higher interest expense, operations and maintenance costs, storm response, vegetation management and other expenses pressured results. The company had approximately $1.3 billion in consolidated liquidity at quarter-end.
• Hawaiian Electric is shifting wildfire-mitigation cost recovery toward securitization and plans to seek a financing order later this year, while also pursuing a proposed $170 million rate increase and significant renewable, storage and grid-resilience investments through 2035.

Hawaiian Electric Industries NYSE: HE reported second-quarter 2026 net income of $123.2 million, or $0.71 per share, including a non-cash accounting adjustment related to the remaining Maui wildfire settlement liability.

Senior Vice President and CFO Paul Ito said the settlement liability was reclassified from a contingent liability to a contractual liability after final conditions to payment were met. The company remeasured the remaining liability to present value, reducing it from $1.44 billion to $1.3 billion and lowering expenses by $153.9 million.

The benefit will reverse over the next three years through interest-expense accretion, Ito said. The company also recorded $8.5 million of insurance recoveries during the quarter related to the Maui wildfire tort liability.

Excluding Maui wildfire settlement-related items and losses tied to Pacific Current asset sales, which the company classifies as non-core, consolidated core net income was $22.5 million, or $0.13 per share. That compared with $35.4 million, or $0.20 per share, in the second quarter of 2025.

Utility earnings pressured by costs and interest expense

Utility core net income declined to $32.6 million from $42.5 million a year earlier. Ito attributed the decrease primarily to higher interest expense following the company’s September 2025 debt issuance, along with higher operations and maintenance costs.

The higher O&M costs reflected increased vegetation-management spending, generation overhaul and maintenance expenses, and overhead and underground inspection and maintenance work. Holding-company core net loss widened to $10.1 million from $7.1 million in the prior-year period, largely because interest income fell after the company used cash for its first settlement payment.

As of the end of the quarter, Hawaiian Electric Industries had approximately $1.3 billion of total consolidated liquidity. The holding company had about $52 million of unrestricted cash, while the utility had approximately $186 million. Additional liquidity was available through the holding company’s at-the-market program and credit facilities, as well as the utility’s accounts receivable and revolving credit facilities.

Management said it has not experienced a meaningful increase in bad-debt expense or write-offs during 2026 despite sustained higher fuel prices. Bad-debt expense was lower than at the same point last year, while net write-offs were relatively flat, according to Ito.

Wildfire mitigation financing shifts toward securitization

President and CEO Scott Seu said the Hawaii Public Utilities Commission approved the utility’s three-year Wildfire Mitigation Plan in December and, in June, granted recovery of roughly $350 million of plan spending through the Exceptional Project Recovery Mechanism. The amount includes about $270 million of capital expenditures and $80 million of O&M spending.

The commission also approved recovery of up to $11.5 million in WMP-related O&M already spent in 2025 and $3.9 million in annual ongoing WMP-related O&M beginning in 2028.

However, following enactment of Act 258, which authorizes securitization for infrastructure-resilience costs, Hawaiian Electric plans to seek recovery of eligible WMP costs through securitization rather than through the EPRM. Seu said the company expects to file an application for a financing order later this year.

“Affordability remains a core focus of ours,” Seu said, adding that securitization is intended to allow the investments to be made at the lowest possible cost to customers.

In response to an analyst question, Ito said WMP expenditures approved for securitization would not become part of the utility’s rate base. The PUC will determine whether the costs qualify for securitization.

Rate case and grid investment plans advance

The company resubmitted its rate rebasing request in July after the PUC directed it to file in a new docket. Hawaiian Electric is seeking a total $170 million base-rate increase phased in over two years, including $125 million proposed to take effect in 2027.

The company requested an interim decision by Dec. 18, 2026, that would allow the first phase of new rates to begin Jan. 1, 2027. Under the commission’s tentative schedule, a final order is expected in mid- to late April 2027. Joe Viola, senior vice president of customer, legal and regulatory affairs, said the company expects to rebase rates again around 2032 for the following five-year multi-year rate plan.

Management said full-year O&M expense will be elevated as the utility moves through what it described as a transition year. Cost pressures include storm response spending after severe weather and flooding in February and March, vegetation management, maintenance work, cybersecurity investments, labor and benefits, and higher insurance premiums.

Hawaiian Electric also expects to incur the maximum penalty under its Fuel Cost Risk Sharing Mechanism and does not expect to achieve the level of Performance Incentive Mechanism and Shared Savings Mechanism rewards it earned in 2025. The utility recorded $7.5 million of such rewards last year, plus $3.3 million from improved heat-rate performance, but currently expects a loss from PIMs and SSMs in 2026.

Procurement plans target renewable and firm capacity

Seu said the company’s updated Integrated Grid Plan prioritizes affordability and energy equity, including through competitive procurement of renewable generation. Hawaiian Electric submitted its final IGP request for proposals to the PUC on July 17 ahead of its Aug. 7 issuance.

The RFP seeks nearly 1,650 gigawatt-hours of variable renewable energy, 465 megawatts of grid-forming resources, and 111 megawatts of firm generating capacity. The company also intends to seek proposals for liquid and gaseous fuels by the end of 2026.

Two additional solar-plus-storage power purchase agreements from the 2023 Stage 3 RFP were approved in June. Hawaiian Electric now has three approved Stage 3 solar-plus-storage contracts totaling 166 MW of solar capacity and 670 megawatt-hours of battery storage.

The company has identified more than $1.3 billion of investments through 2035 for renewable-project interconnection expansion, nearly $60 million of distribution upgrades over the next decade, and $190 million over five years for its PUC-approved Climate Adaptation Program.

Separately, Seu said the PUC asked the company to demonstrate the need for a potential procurement of up to 500 MW of additional firm generation on Oʻahu. Hawaiian Electric said it views the request as reasonable and plans to respond with analyses of capacity, reliability, stakeholder engagement and alignment with the Integrated Grid Plan.

About Hawaiian Electric Industries (NYSE:HE)

Hawaiian Electric Industries, Inc is a diversified holding company operating in the energy and financial services sectors in the state of Hawaii. Its principal subsidiary, Hawaiian Electric Company, provides generation, transmission, distribution and customer service to the island of Oahu, while its Maui Electric and Hawaii Electric Light Company subsidiaries serve Maui, Molokai, Lanai and Hawaii Island. The roots of the electric utility business trace back to 1891 when service first commenced in Honolulu.

Through its subsidiary Hawaii Gas, HEI extends its energy portfolio to include the distribution of natural gas and propane, supporting residential, commercial and industrial customers across the islands.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.

Continue following MarketBeat

Add MarketBeat as your preferred source on Google to see our latest stories in your feed.

Add As Preferred Source