Management’s Discussion and Analysis of Financial Condition and Results of Operations
Moody’s
Moody’s Investors Service’s
MPIR
Major Project Interim Recovery
MRP
Multi-year rate period
Megawatt/s (as applicable)
MWh
Megawatt-hour/s (as applicable)
Not applicable
NPBC
Net periodic benefits costs
NPPC
Net periodic pension costs
Other operation and maintenance
OPEB
Postretirement benefits other than pension
Pacific Current
Pacific Current, LLC, a wholly owned subsidiary of HEI and parent company of Kaʻaipuaʻa, LLC, Mahipapa, LLC and Pacific Current, Solar and Storage Holding Company, LLC. On March 10, 2025, Hamakua Holdings, LLC was sold. In June 2025, all of Pacific Current’s membership interests in Mauo, LLC, Alenuihaha Developments, LLC, Kaʻieʻie Waho Company, LLC, and Upena, LLC were transferred to PC Opco. On August 1, 2025, PC Opco was sold.
iii
GLOSSARY OF TERMS (continued)
Terms
Definitions
PC Holdco
Pacific Current, Solar and Storage Holding Company, LLC, a wholly owned subsidiary of Pacific Current and parent company of PC Opco.
PC Opco
Pacific Current, Solar and Storage Operating Company, LLC, previously a wholly owned subsidiary of PC Holdco. In June 2025, Pacific Current transferred all of the outstanding membership interests in Mauo, LLC, Alenuihaha Developments, LLC, Kaʻieʻie Waho Company, LLC and Upena, LLC to PC Opco. On August 1, 2025, PC Opco was sold.
PBO
Projected benefit obligation
PBR
Performance-based regulation
PCB
Polychlorinated biphenyls
PGV
Puna Geothermal Venture
PIMs
Performance incentive mechanisms
PPA
Power purchase agreement
PPAC
Purchased power adjustment clause
PSPS
Public Safety Power Shutoff
PUC
Public Utilities Commission of the State of Hawaii
PURPA
Public Utility Regulatory Policies Act of 1978
Photovoltaic
Qualifying Facility under the Public Utility Regulatory Policies Act of 1978
RAM
Revenue adjustment mechanism
RBA
Revenue balancing account
Registrant
Each of Hawaiian Electric Industries, Inc. and Hawaiian Electric Company, Inc.
RFPs
Request for proposals
RHI
Renewable Hawaii, Inc., a wholly owned nonregulated subsidiary of Hawaiian Electric Company, Inc.
ROACE
Return on average common equity
RORB
Return on rate base
RPS
Renewable portfolio standards
S&P Global Ratings
SAIDI
System Average Interruption Duration Index
SAIFI
System Average Interruption Frequency Index
SEC
Securities and Exchange Commission
See
Means the referenced material is incorporated by reference (or means refer to the referenced section in this document or the referenced exhibit or other document)
SOFR
Secured Overnight Financing Rate
SPRBs
Special Purpose Revenue Bonds
SSM
Shared Savings Mechanism
Stage 1
Request for proposal process to procure renewable projects governed by the PUC in February 2018
Stage 2
Request for proposal process to procure renewable projects governed by the PUC in August 2019
state
State of Hawaii
Tax Act
2017 Tax Cuts and Jobs Act (H.R. 1, An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018)
ULSD
Ultra-low sulfur diesel
Utilities
Hawaiian Electric Company, Inc., Hawaii Electric Light Company, Inc. and Maui Electric Company, Limited
VIE
Variable interest entity
WMP
Wildfire Mitigation Plan
WSS
Wildfire Safety Strategy
Cautionary Note Regarding Forward-Looking Statements
This report and other presentations made by Hawaiian Electric Industries, Inc. (HEI) and Hawaiian Electric Company, Inc. (Hawaiian Electric) and their subsidiaries contain “forward-looking statements,” which include statements that are predictive in nature, depend upon or refer to future events or conditions and usually include words such as “will,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “predicts,” “estimates” or similar expressions. In addition, any statements concerning future financial performance, ongoing business strategies or prospects or possible future actions are also forward-looking statements. Forward-looking statements are based on current expectations and projections about future events and are subject to risks, uncertainties and the accuracy of assumptions concerning HEI and its subsidiaries (collectively, the Company), the performance of the industries in which they do business and economic, political and market factors, among other things. These forward-looking statements are not guarantees of future performance and actual results and financial condition may differ materially from those indicated in the forward-looking statements.
Risks, uncertainties and other important factors that could cause actual results to differ materially from those described in forward-looking statements and from historical results include, but are not limited to, the following:
• the potential for further trade policy changes under the current administration could disrupt our supply chains and increase costs, e.g., the Utilities’ capital goods and equipment purchases and those of its independent power producers (IPPs) that contain components, sub-components, or raw materials sources from outside the U.S. could experience increases in costs, which could threaten the viability of projects and impact our ability to meet customer demand and the Utilities’ ability to achieve renewable portfolio standards (RPS) goals;
• the impact of the Maui windstorm and wildfires, including liabilities in excess of settlement amounts and potential regulatory penalties, which may result in significant costs that may be unrecoverable (or not reimbursed on a timely basis) through insurance and/or rates;
• an increase in insurance premiums and the inability to fully recover premiums through rates or the potential inability to obtain wildfire and general liability insurance coverage at reasonable rates, if available at all;
• the ability to raise the amount of capital necessary on reasonable terms, if at all, for the Company’s and the Utilities’ contribution to the Maui wildfire tort litigation settlement in order to alleviate future conditions that may cause substantial doubt about HEI’s and the Utilities’ ability to continue as a going concern;
• potential further dilution to existing shareholders if the Company raises funds by issuing additional equity or equity-linked securities;
• the inability to execute financing plans to alleviate future conditions that may cause substantial doubt about HEI’s and the Utilities’ ability to continue as a going concern prior to the issuance of their respective annual financial statements, which could result in an event of default and an acceleration of the Company’s and the Utilities’ debt and lead to filing for bankruptcy protection if waivers from lenders are not received;
• extreme weather events, including windstorms and other natural disasters, particularly those driven or exacerbated by evolving climate dynamics, which could increase the risk of the Utilities’ equipment being damaged, becoming inoperable or contributing to a wildfire;
• future suspension, material reduction or extended delay in dividends or other distributions from operating subsidiaries to HEI;
• further downgrades by securities rating agencies in their ratings of the securities of HEI and Hawaiian Electric and their impact on results of financing efforts;
• the risks of suffering losses and incurring liabilities that are uninsured (e.g., damages to the Utilities’ transmission and distribution system and losses from business interruption) or underinsured (e.g., losses not covered as a result of insurance deductibles or other exclusions or exceeding policy limits), and the risks associated with the operation of transmission and distribution assets and power generation facilities, including public and employee safety issues, and assets causing or contributing to wildfires;
• international, national and local economic and political conditions—including the state of the Hawaii tourism, defense and construction industries; the strength or weakness of the Hawaii and continental U.S. real estate markets; decisions concerning the extent of the presence of the federal government and military in Hawaii; the implications and potential impacts of federal government shutdowns, including the impact to the Utilities’ customers’ ability to pay their electric bills and the impact on the State of Hawaii economy; the implications and potential impacts of U.S. and foreign capital and credit market conditions and federal, state and international responses to those conditions; the potential impacts of global and local developments (including global economic conditions and uncertainties, unrest, terrorist acts, wars, conflicts, political protests, deadly virus epidemic or other crisis); the effects of changes that have or may occur in U.S. policy, such as with respect to immigration and trade; and pandemics;
• the ability to adequately address risks and capitalize on opportunities related to the Company’s and the Utilities’ sustainability priority areas, which include safety, reliability and resilience, including relating to wildfires and other extreme weather events, decarbonization, economic health and affordability, secure digitalization, human capital management, employee engagement, and climate-related risks and opportunities;
• citizen activism, including civil unrest, especially in times of severe economic depression and heightened social and political divisions, which could negatively impact customers and employees, impair the ability of the Company and the Utilities to operate and maintain their facilities in an effective and safe manner, and citizen or stakeholder activism that could delay the
construction, increase project costs or preclude the completion of third-party or Utility projects that are required to meet electricity demand, resilience and reliability objectives and RPS and other climate-related goals;
• the effects of actions or inaction of the U.S. government or related agencies, including those related to the U.S. debt ceiling or budget funding, monetary policy, trade policy, energy and environmental policy, and other policy and regulatory changes advanced or proposed by the current administration;
• weather, natural disasters (e.g., hurricanes, earthquakes, tsunamis, lightning strikes, lava flows and the effects of evolving climate dynamics, such as more severe storms, flooding, droughts, heat waves, and rising sea levels) and wildfires, including their impact on the resilience and reliability and cost of the Company’s and Utilities’ operations, and the economy;
• the timing, speed and extent of changes in interest rates and the shape of the yield curve, which could result in higher borrowing costs and changes in market liquidity;
• the continued ability of the Company and the Utilities to access the credit and capital markets to fund necessary investments and expenditures (e.g., to obtain short-term and long-term debt financing, including lines of credit, and, in the case of HEI, to issue common stock) under volatile and challenging market conditions, and the potential higher cost of such financings, if available, and due to the uncertainties associated with the costs related to the Maui windstorm and wildfires;
• the risks inherent in changes in the value of the Company’s pension and other retirement plan assets, and the risks inherent in changes in the value of the Company’s pension liabilities, including changes driven by stock market values, interest rates and mortality improvements;
• changes in laws, regulations (including tax regulations), market conditions, interest rates and other factors that result in changes in assumptions used to calculate retirement benefits costs and funding requirements;
• the potential delay by the Public Utilities Commission of the State of Hawaii (PUC) in considering (and potential disapproval of actual or proposed) proposals related to wildfire safety, renewable energy or grid resiliency, among others, and related costs; reliance by the Utilities on outside parties such as the State, IPPs and developers; supply-chain challenges; and uncertainties surrounding technologies, solar power, wind power, biofuels, liquefied natural gas, environmental assessments required to meet RPS and other climate-related goals; the impacts of implementation of the wildfire mitigation, renewable energy and resilience proposals on future costs of electricity and potential penalties imposed by the PUC for delays in the commercial operations of renewable energy projects;
• the ability of the Utilities to develop, execute and recover the implementation costs of the Utilities’ action plans included in their Integrated Grid Plan, which was accepted by the PUC in 2024, due to the recent issuance of the PUC’s 2024 Inclinations on the Future of Energy in Hawaii, Governor Josh Green’s Executive Order No. 25-01, Accelerating Hawaii’s Transition Toward 100 Percent Renewable Energy, and the Hawaii State Energy Office’s Alternative Fuel, Repowering and Energy Transition Study on the aforementioned plans of the Utilities;
• the ability of the Utilities to recover undepreciated cost of fossil fuel generating units, if they are required to be retired before the end of their expected useful life;
• capacity and supply constraints or difficulties, especially if generating units (utility-owned or IPP-owned) fail or measures such as demand-side management, distributed generation, combined heat and power or other firm capacity supply-side resources fall short of achieving their forecasted benefits or are otherwise insufficient to reduce or meet peak demand;
• high and/or volatile fuel prices, which increases working capital requirements and customer bills, or delivery of adequate fuel by suppliers (including as a result of the Russia-Ukraine war and conflicts in the Middle East), which could affect the reliability of utility operations, and the continued availability to the Utilities of their energy cost recovery clauses (ECRCs);
• the continued availability to the Utilities or modifications of other cost recovery mechanisms, including the purchased power adjustment clauses (PPACs), annual revenue adjustment (ARA) and pension and postretirement benefits other than pensions (OPEB) tracking mechanisms, and the continued decoupling of revenues from sales to mitigate the effects of declining kilowatt-hour sales;
• the ability of the Utilities to recover increasing or additional costs (e.g., due to trade policies imposed by the current administration or other factors impacting prices) and earn a reasonable return on capital investments not covered by the ARA, while providing the customer dividend required by performance-based regulation (PBR);
• the impact from the PUC’s modification of the PBR for the Utilities pursuant to Act 005, Session Laws 2018, including the potential changes to existing and/or addition of new performance incentive mechanisms (PIMs), third-party proposals adopted by the PUC, and the implications of not achieving performance incentive goals;
• the impact of fuel price levels and volatility on customer satisfaction and political and regulatory support for the Utilities;
• unfavorable changes in economic conditions, such as sustained inflation, higher interest rates or recession, that negatively impact the ability of the Company’s customers to pay their utility bills and increase operating costs of the Utilities that cannot be passed on to, or recovered, from customers;
• the risks associated with increasing reliance on renewable energy, including the availability and cost of non-fossil fuel supplies for renewable energy generation and the operational impacts and related cost impacts of adding intermittent sources of renewable energy to the electric grid;
• the growing risk that energy production from renewable generating resources may be curtailed and the interconnection of additional resources will be constrained as more generating resources are added to the Utilities’ electric systems and as customers reduce their energy usage;
• the ability of IPPs to deliver the firm capacity anticipated in their power purchase agreements (PPAs);
• the potential that, as IPP contracts near the end of their terms, there may be less economic incentive for the IPPs to make investments in their units to ensure the availability of their units;
• the ability of the Utilities to negotiate, periodically, favorable agreements for significant resources such as fuel supply contracts and collective bargaining agreements and avoid or mitigate labor disputes and work stoppages;
• new technological developments that could affect the operations and prospects of the Utilities or their competitors such as the commercial development of energy storage and microgrids;
• the potential that cyber or physical security incidents, including potential incidents at HEI, its subsidiaries (including at electric utility plants), third-party service providers, contractors and customers with whom they have shared data (IPPs, distributed energy resources aggregators and customers enrolled under distributed energy resources programs) and incidents at data processing centers used, to the extent not prevented by physical and cybersecurity protections, could result in operational disruption; the misappropriation or loss of confidential or proprietary assets, information or data, including customer, employee, financial, or operating system information, or intellectual property; corruption of data; or potential costs, lost revenues, litigation, or reputational harm;
• failure to achieve remaining cost savings commitment related to the management audit recommendations of $6.6 million per year during the multi-year rate period (MRP) from June 2021 to May 2026, and continuing until the second MRP begins;
• federal, state, county and international governmental and regulatory actions, such as existing, new and changes in laws, rules and regulations applicable to HEI and the Utilities (including changes in taxation and tax rates, increases in capital requirements, regulatory policy changes, environmental laws and regulations (including resulting compliance costs and risks of fines and penalties and/or liabilities), the regulation of greenhouse gas emissions, governmental fees and assessments, and potential carbon pricing or “cap and trade” legislation that may fundamentally alter costs to produce electricity and accelerate the move to renewable generation);
• the impact from the PUC’s implementation of wheeling for the Utilities, including cost shifting and customer equity considerations, the potential increased competition, and other legal and technical implications, pursuant to Act 266, which authorizes wheeling of renewable energy and requires the PUC to establish associated policies and procedures;
• developments in laws, regulations and policies governing protections for historic, archaeological and cultural sites, and plant and animal species and habitats, as well as developments in the implementation and enforcement of such laws, regulations and policies;
• discovery of conditions that may be attributable to historical chemical releases, including any necessary investigation and remediation, and any associated enforcement, litigation or regulatory oversight;
• decisions by the PUC in rate cases and other proceedings (including the risks of delays in the timing of decisions, adverse changes in final decisions from interim decisions and the disallowance of project costs as a result of adverse regulatory audit reports or otherwise);
• decisions by the PUC and by other agencies and courts on land use, environmental and other permitting issues (such as required corrective actions, restrictions and penalties that may arise, such as with respect to environmental conditions or RPS);
• the risks associated with the geographic concentration of HEI’s businesses;
• changes in accounting principles applicable to HEI and its subsidiaries, including the adoption of new U.S. accounting standards, the potential discontinuance of regulatory accounting related to PBR or other regulatory changes, the effects of potentially required consolidation of variable interest entities (VIEs), or required finance lease or on-balance-sheet operating lease accounting for PPAs with IPPs;
• the final outcome of tax positions taken by HEI and its subsidiaries;
• the ability to effectively utilize federal and state net operating loss carryforwards;
• the ability to service the non-recourse debt of Mahipapa, LLC, the last remaining operating subsidiary of Pacific Current, LLC, a non-regulated subsidiary of the Company, if the Company is unable to complete the sale of Mahipapa, LLC;
• the Company’s reliance on third parties and the risk of their non-performance; and
• other risks or uncertainties described elsewhere in this report (e.g., Item 1A. Risk Factors) and in other reports previously and subsequently filed by HEI and/or Hawaiian Electric with the Securities and Exchange Commission (SEC).
Forward-looking statements speak only as of the date of the report, presentation or filing in which they are made. Except to the extent required by the federal securities laws, HEI, Hawaiian Electric, Pacific Current and their subsidiaries undertake no obligation to publicly update or revise any forward-looking statements, whether written or oral and whether as a result of new information, future events or otherwise.
vii
PART I
ITEM 1. BUSINESS
HEI Consolidated
HEI and subsidiaries and lines of business. HEI is a holding company with its subsidiaries principally engaged in electric utility and non-regulated renewable/sustainable infrastructure businesses operating in the State of Hawaii. As a holding company, HEI’s sources of funds are primarily dividends from its Electric utility operating subsidiaries, borrowings, and sales of equity. The rights of HEI and its creditors and shareholders to participate in any distribution of the assets of any of HEI’s subsidiaries are subject to the prior claims of the creditors of such subsidiary, except to the extent that claims of HEI in its capacity as a creditor are recognized as primary. The abilities of certain of HEI’s subsidiaries to pay dividends or make other distributions to HEI are subject to contractual and regulatory restrictions (see Note 15 of the Consolidated Financial Statements). HEI is headquartered in Honolulu, Hawaii and 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 and its operating utility subsidiaries, Hawaii Electric Light Company, Inc. (Hawaii Electric Light) and Maui Electric Company, Limited (Maui Electric), are regulated electric public utilities that provide essential electric service to approximately 95% of Hawaii’s population through the operation of five separate grids that serve communities on the islands of Oahu, Hawaii, Maui, Lanai and Molokai. See also “Electric utility” section below.
All Other . The All Other non-reportable segment is composed of HEI’s corporate-level operating, general and administrative expenses and the results of Pacific Current, LLC (Pacific Current). Pacific Current was formed in September 2017 to focus on investing in non-regulated clean energy and sustainable infrastructure in the State of Hawaii to help reach the state’s sustainability goals. 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. See also “Electric utility—Hawaii Electric Light firm capacity PPAs” section below and Note 3 of the Consolidated Financial Statements for additional information on Pacific Current activities. The All Other segment also includes ASB Hawaii, Inc. (ASB Hawaii) (a holding company), which previously owned ASB, and 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.
Additional information . Prior to December 31, 2024, ASB Hawaii owned ASB, a federally chartered, full-service Hawaii community bank. ASB was a reportable segment of HEI, until its sale on December 31, 2024. For additional information about HEI, see HEI’s MD&A, HEI’s “Quantitative and Qualitative Disclosures about Market Risk” and HEI’s Consolidated Financial Statements.
The Company’s website address is www.hei.com , where annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports (last 10 years) are made available free of charge in the Investor Relations section as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC (and available at the SEC’s website at www.sec.gov). The information on the Company’s website is not incorporated by reference in this annual report on Form 10-K unless, and except to the extent, specifically incorporated herein by reference. HEI and Hawaiian Electric intend to continue to use HEI’s website as a means of disclosing additional information. Accordingly, investors should routinely monitor such portions of HEI’s website, in addition to following HEI’s and Hawaiian Electric’s press releases, SEC filings and public conference calls and webcasts. Investors may also wish to refer to the PUC website at hpuc.my.site.com/cdms/s/ in order to review documents filed with and issued by the PUC. No information at the PUC website is incorporated herein by reference, and the Company has no control over its accuracy or completeness.
Regulation. HEI and Hawaiian Electric are each holding companies within the meaning of the Public Utility Holding Company Act of 2005 and implementing regulations, which requires holding companies and their subsidiaries to grant the Federal Energy Regulatory Commission (FERC) access to books and records relating to FERC’s jurisdictional rates. FERC granted HEI and Hawaiian Electric a waiver from its record retention, accounting and reporting requirements, effective May 2006.
HEI is subject to an agreement entered into with the PUC (the PUC Agreement) which, among other things, requires PUC approval of any change in control of HEI. The PUC Agreement also requires HEI to provide the PUC with periodic financial information and other reports concerning intercompany transactions and other matters. It also prohibits the Utilities from loaning funds to HEI or its nonutility subsidiaries and from redeeming common stock of the electric utility subsidiaries without PUC approval. Further, the PUC could limit the ability of the electric utility subsidiaries to pay dividends on their common stock. See also Note 15 of the Consolidated Financial Statements and “Electric utility—Regulation” below.
In October 2021, Pacific Current requested informal guidance from the PUC regarding application of the affiliate transaction requirements (ATRs) to certain investments. In response, in January 2022, the PUC issued guidance (Order No. 38186, Docket No. 2018-0065) providing that, if Pacific Current acquires or invests in an unaffiliated entity that has been awarded a power purchase agreement with the Utilities through the Stage 1 or 2 Request for proposals (RFPs), such entity would become an “Affiliate” or “Affiliate-Related Entity” under the ATRs, and any wholesale power transactions between the entity and the Utilities, including under the awarded power purchase agreement, would require PUC review and approval. Subsequent to the Maui windstorm and wildfires, HEI and Pacific Current have suspended any new investments while undertaking a comprehensive review of strategic options for certain assets of Pacific Current.
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. On December 30, 2024, HEI, ASB and ASB Hawaii 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 9.9% of the common stock of ASB. The sale transaction closed on December 31, 2024. HEI and ASB Hawaii no longer have a controlling interest in ASB and are no longer subject to applicable federal and state regulation and supervision (including under the Federal Reserve Board and Office of the Comptroller of the Currency).
As part of HEI’s comprehensive review of strategic options for certain assets of Pacific Current, 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, which owned a 60-MW combined cycle power plant that sells power to Hawaii Electric Light under an existing power purchase agreement, and HAESP, LLC (created in connection with the current on-going Stage 3 RFP process).
In addition, 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, Kaʻieʻie Waho Company, LLC, Upena, LLC and Alenuihaha Developments, LLC (Project Companies). As a result of the Solar Asset Disposition, effective as of August 1, 2025, Pacific Current no longer owns the Project Companies. Pacific Current is currently in the process of selling the membership interest in its remaining operating subsidiary, Mahipapa, LLC.
Pursuant to HEI’s divestiture strategy, on October 31, 2025, HEI and Hawaiian Electric filed a revised request with the PUC to terminate or suspend the ATRs. 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.
Environmental regulation . HEI and its subsidiaries are subject to federal and state statutes and governmental regulations pertaining to water quality, air quality and other environmental factors. See the “Environmental regulation” discussion in the “Electric utility” section below, and Note 1 of the Consolidated Financial Statements.
Human Capital Resources. The Company’s workforce and culture are critical to its ability to achieve its business strategies. As such, the Company seeks to attract, retain and develop a talented workforce and create a high-performing, inclusive and safety-driven culture.
Employees . The Company had total and full-time employees as follows:
December 31
Total
Full-time
Total
Full-time
Total
Full-time
employees
employees
employees
employees
employees
employees
HEI 1
Hawaiian Electric and its subsidiaries
ASB 2
1 Includes consolidated Pacific Current employees. For 2025, 2024, and 2023, HEI corporate had 39, 44, and 45 employees, respectively.
2 Beginning December 31, 2024, as a result of the sale transaction, ASB was no longer a subsidiary of HEI.
The employees of HEI and its direct and indirect subsidiaries, other than the Utilities, are not covered by any collective bargaining agreement. 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 new 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.
Culture of inclusion and belonging . The Company is committed to fostering an inclusive culture – where all employees can thrive, feel a sense of belonging, and contribute at their highest potential. This type of culture supports greater collaboration, trust, engagement, excellence and innovation - strengthening problem-solving and decision-making across the Company. The Company believes that a workforce enriched by diverse backgrounds, experiences, skills and perspectives is essential to effectively serving its customers, communities and stakeholders. Operating exclusively in Hawaii, one of the most culturally diverse states in the U.S., the Company also recognizes the value of having employees who understand and reflect the unique culture, history and demographics of the communities it serves.
Employee development & training . To meet the evolving demands of its industries, address the Company’s stakeholder needs, attract and retain talent, and effectively execute its strategies, the Company depends on a workforce that is highly skilled and adaptable. Accordingly, the Company invests in targeted skill-building opportunities, as well as industry-specific and leadership development programs, to support ongoing employee growth and performance.
Hawaiian Electric provides employees of both Hawaiian Electric and HEI holding company with a wide range of skills and professional development opportunities. These include leadership development courses, employee development courses, technical training, apprenticeship programs, operational and environmental compliance training, cybersecurity awareness, and required safety courses. The Company also offers tailored leadership programs, such as supervisor training designed to help new supervisors transition into key operational, administrative, and leadership roles. In addition, leadership and employee assessments support improved productivity and workplace effectiveness. Learning and development initiatives are aligned with both individual and organizational performance goals and are reinforced through the annual performance evaluation process. Ongoing leadership succession planning further ensures the identification and development of successors and high potential employees, helping to maintain a strong leadership pipeline.
Safety and health . As a core value, the Company strives to create workplace environments that prioritize the physical and emotional well-being of its employees. For the Utility, safety is of paramount importance due to the inherent risks involved in certain aspects of its operations and the critical role the Utility plays in maintaining the electrical grid for the State of Hawaii.
Hawaiian Electric is committed to maintaining a strong safety culture. Due to the intrinsic nature of its operations, safety is embedded in Hawaiian Electric’s DNA. Management proactively assumes the responsibility of providing visible leadership and strategic direction for the health and safety management system and programs in their area of oversight. This leadership and direction are instrumental to building and sustaining a resilient safety culture and drive continual safety improvement. Allocating adequate resources to enable seamless implementation of safety programs and holding leaders accountable for the implementation of safety programs and resulting health and safety performance are strategic requirements. This commitment is reinforced through executive compensation tied to safety performance metrics, such as recordable incidents and lost workdays. These measures reward improvements in workplace safety, promote employee well-being, and contribute to long-term cost reductions. Hawaiian Electric’s ultimate goal is zero incidents, with every employee taking ownership of their own safety and that of their co-workers, contractors, and the public. More information on such targets is available in HEI’s 2026 Proxy Statement.
Beyond safety, Hawaiian Electric fosters a culture of total well-being to support its employees from hire to retire and beyond. Hawaiian Electric integrates wellness as a business strategy, offering programs that address emotional, physical, occupational, social, spiritual, intellectual, environmental and financial health. These include access to an extensive Employee Assistance Program for employees and their family members, participation in various community charity walks, wellness related trainings and resources, onsite mental health support, a wide variety of corporate wellness activities, gym and group fitness discounts, and financial wellness classes.
Workforce Stability . The Company’s employees are its greatest asset and the Company strives to create a highly desirable place to work.
Hawaiian Electric seeks to provide compensation and benefits that are comprehensive, market-competitive, and internally equitable to attract, engage, and retain highly skilled employees. Hawaiian Electric believes that employee engagement is key to creating a desirable, inclusive, rewarding place to work and conducts employee engagement surveys on a regular cycle. Hawaiian Electric is expanding its strategic workforce planning initiative to build its workforce to support future transformation plans.
Properties. HEI leases office space from a nonaffiliated lessor in downtown Honolulu under leases that expire in December 2027. Mahipapa, LLC (Mahipapa ) , a wholly owned subsidiary of Pacific Current, owns a 7.5-MW biomass facility located on approximately 65 acres of land and leases 3,500 acres on the island of Kauai. See “Electric utility” section for a description of properties owned and leased.
Electric utility
Hawaiian Electric and subsidiaries and service areas. 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 of Hawaiian Electric’s equity securities are directly owned by HEI.
In 2025, the Utilities’ revenues and net income amounted to approximately 99% and 137% respectively, of HEI’s consolidated revenues and income from continuing operations. In 2024, the Utilities’ revenues and net loss amounted to approximately 100% and 93% respectively, of HEI’s consolidated revenues and loss from continuing operations. In 2023, the Utilities’ revenues and net income amounted to approximately 99% and 133%, respectively, of HEI’s consolidated revenues and income from continuing operations.
The islands of Oahu, Hawaii, Maui, Lanai and Molokai have a combined population estimated at 1.4 million, or approximately 95% of the total population of the State of Hawaii, and comprise a service area of approximately 5,800 square miles. The principal communities served include Honolulu (on Oahu), Hilo and Kona (on Hawaii) and Wailuku and Kahului (on Maui). The service areas also include numerous suburban communities, resorts, U.S. Armed Forces installations and agricultural operations. In November 2020, the PUC approved Hawaiian Electric’s acquisition of the electric distribution systems serving 12 U.S. Army installations on Oahu, including Schofield Barracks, Wheeler Army Airfield, Tripler Army Medical Center, Fort Shafter and Army housing areas.
The State has granted Hawaiian Electric, Hawaii Electric Light and Maui Electric nonexclusive franchises, which authorize the Utilities to construct, operate and maintain facilities over and under public streets and sidewalks. Each of these franchises will continue in effect for an indefinite period of time until forfeited, altered, amended or repealed.
Climate action plan. In 2021, the Utilities set an aggressive goal to cut carbon emissions from power generation 70% by 2030, compared with 2005 levels. The emissions covered by this goal include stack emissions from generation owned by Hawaiian Electric and independent power producers (IPPs) who sell electricity to the Utilities. In addition, the Utilities have committed to achieving net zero carbon emissions from power generation by 2045 or sooner.
Key elements of the 2030 plan to reduce emissions include:
• The closing of the state’s last coal plant, which occurred in September 2022 upon expiry of the PPA
• Adding nearly 50,000 rooftop solar systems, more than a 50% increase, compared to the approximately 90,000 systems online in 2021 when the climate action plan was developed
• Retiring at least six fossil-fueled generating units and significantly reducing the use of others as new renewable resources come online
• Adding additional renewable energy projects capable of generating a total of at least 1 gigawatt beyond resources in place in 2021, including shared solar (community-based renewable energy)
• Using more grid-scale and customer-owned energy storage
• Expanding geothermal resources
• Creating innovative programs that provide customers incentives for using clean, lower-cost energy at certain times of the day and using less fossil-fueled energy at night
Since the time the 2030 goal was established, 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 related to solar panel imports, have slowed the pace of progress toward reducing greenhouse gas (GHG) emissions. The downgrade of Hawaiian Electric’s credit ratings after the Maui windstorm and wildfires, which makes it more difficult for independent power producers to procure low-cost financing, has added an additional impediment to completion of new renewable energy and storage projects. Further, the recent repealing of the investment tax credit for renewables is also expected to impact the ability to procure new generation at reasonable rates. As a result of these challenges, the Utilities expect the planned 70% reduction in carbon emissions to be achieved later than the original 2030 target date. However, the Utilities will continue to replace significant amounts of fossil fuel generation with renewable energy between now and 2030 and expect to meet or exceed the State of Hawaii’s RPS goals. 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.
After 2030, progress on elimination of carbon from power generation assumes continued use of proven resources, including wind, solar, geothermal, hydroelectric, biofuels and energy storage, along with the development of new and existing technologies. Those technologies may include offshore wind, green hydrogen, wave energy and carbon-capture—all currently
under development around the world—as well as other solutions that will emerge. A diverse portfolio of resources will also enhance resilience to climate-related events.
Sales of electricity.
Years ended December 31
(dollars in thousands)
Customer accounts*
Electric sales revenues
Customer accounts*
Electric sales revenues
Customer accounts*
Electric sales revenues
Hawaiian Electric
Hawaii Electric Light
Maui Electric
* As of December 31.
Regulatory mechanisms . Base electric rates are set in rate cases, and on April 29, 2020, the PUC issued an order terminating the mandatory triennial rate case cycle in anticipation of the performance-based regulation framework (PBR Framework). The regulatory framework in effect in 2020 included a number of mechanisms designed to provide utility financial stability during the transition toward the state’s 100% renewable energy goals. For example, under the sales decoupling mechanism, the Utilities are allowed to recover from customers, the PUC-approved target revenues, independent of the level of kilowatt-hour (kWh) sales. The decoupling mechanism (i.e., the Revenue Balancing Account) continues under the PBR Framework.
On December 23, 2020, the PUC issued a D&O in Phase 2 of the PBR proceeding, establishing the PBR Framework for the Utilities. The PBR Framework includes, among other matters, a five-year multi-year rate plan with an index-driven annual revenue adjustment (ARA), which replaces the RAM, modification of the MPIR mechanism (renamed Exceptional Project Recovery Mechanism (EPRM)) to include deferred and operation and maintenance (O&M) expense projects and to 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, and continuation of (i) the revenue balancing account, (ii) the pension and other postretirement benefit tracking mechanisms, and (iii) energy cost recovery clause, purchased power adjustment clause, and other recovery mechanisms. See “Commitments and contingencies-Regulatory proceedings-Performance-based regulation framework” in Note 4 of the Consolidated Financial Statements.
These regulatory mechanisms are summarized as follows:
Mechanism
Description
Sales decoupling
Provides predictable revenue stream by fixing net revenues at the level approved in last rate case plus the PUC-approved adjustments (revenues not linked to kWh sales).
Annual Revenue Adjustment (ARA)
Annually adjusts revenue levels during a Multi-Year Rate Period, determined by formula which includes an inflation factor, a predetermined productivity adjustment (currently set at zero), adjustments for exceptional circumstances not in the Utilities’ control and a customer dividend component. The ARA replaced the Revenue Adjustment Mechanism (RAM) effective June 1, 2021.
Demand-Side Management Mechanism
Allows for recovery of costs related to demand side management programs not included in base rates, including recovery of incentive payments for the Utilities’ Scheduled Dispatch Program and Bring Your Own Device Program.
Exceptional Project Recovery Mechanism (EPRM)
Reduces regulatory lag and permits recovery of revenues for net costs of approved eligible projects placed in service during the Multi-Year Rate Period through the revenue balancing account (RBA) that is not provided for by other effective tariffs, the ARA, Performance Incentive Mechanism (PIMs) or Shared Savings Mechanisms (SSMs). The EPRM was formerly known as the Major Project Interim Recovery (MPIR) adjustment mechanism.
Energy cost recovery clause (ECRC) and purchased power adjustment clause (PPAC)
Allows for timely recovery of fuel and purchased power costs to reduce earnings volatility. Symmetrical fossil fuel cost risk-sharing (98% customer/2% utility) mechanism established for Hawaiian Electric, Hawaii Electric Light and Maui Electric capped at $2.5 million, $0.6 million and $0.6 million annually, respectively.
Performance incentive mechanism (PIM) / Shared Savings Mechanism (SSM)
Annually adjusts revenue to recover from or credit customers for specific areas of the Utilities’ performance measured against the PUC’s approved targets. Adding a portfolio of SSMs and new PIMs is intended to encourage acceleration in renewables, grid services, interconnection of DERs, low-to-moderate income energy efficiency, advanced metering infrastructure, generation-based reliability (penalties only), interconnection of utility scale renewable projects, and cost control of non-ARA costs and allow for financial rewards for exemplary performance.
Pension and other post-employment benefit trackers
Allows tracking of pension and other post-employment benefit costs and contributions above or below the cost included in rates in a separate regulatory asset/liability account.
Renewable energy infrastructure program
Permits recovery of renewable energy infrastructure projects through a surcharge.
Pilot Process
Fosters innovation by establishing an expedited implementation process for pilots that test new technologies, programs, business models and other arrangements and allows for timely cost recovery of annual expenditures of approved pilot projects through an adjustment to target revenues. Proposed pilots are subject to PUC approval with a total annual cap of $10 million.
Earnings Sharing Mechanism (ESM)
Protects the Utilities and customers from excessive earnings or losses, as measured by the Utilities’ achieved rate making ROACE; reflecting a symmetrical ESM for achieved rate making ROACE outside of a 300 basis points dead band above or below the current authorized ROACE of 9.5% for each of the Utilities (i.e., above 12.5% or below 6.5%).
Seasonality . kWh sales of the Utilities follow a seasonal pattern, but they do not experience extreme seasonal variations experienced by some electric utilities on the U.S. mainland. In Hawaii, kWh sales tend to increase in the warmer, more humid months as a result of increased demand for air conditioning and higher visitor arrivals. This is partially offset by the reduction of sales due to privately owned customer photovoltaic (PV) systems which generate the most energy during the aforementioned warmer months.
Significant customers . The Utilities derived approximately 11%, 11% and 12% of their operating revenues in 2025, 2024 and 2023, respectively from the sale of electricity to various federal government agencies. Hawaiian Electric continues to work with various federal agencies to implement measures that will help them achieve their energy efficiency, resilience and clean energy objectives.
Selected consolidated electric utility operating statistics.
Years ended December 31
MWh sales (thousands)
Residential
Commercial
Industrial
Other
MWh net generated and purchased (thousands)
Net generated
Purchased
MWh customer-sited solar (thousands)
RPS (%) 1
Losses and system uses (%)
Energy supply (December 31)
Net generating capability—MW
Firm and other purchased capability—MW 2
Net peak demand—MW 3
Btu per net kWh generated
Average fuel oil cost per MBtu (cents)
Customer accounts (December 31)
Residential
Commercial
Industrial
Other
Electric revenues (thousands)
Residential
Commercial
Industrial
Other
Average revenue per kWh sold (cents)
Residential
Commercial
Industrial
Other
Residential statistics
Average annual use per customer account (kWh)
Average annual revenue per customer account
Average number of customer accounts
1 In July 2022, former Governor Ige signed Act 240 (H.B.2089), which 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.
2 AES Hawaii provided 180 MW of firm capacity from its coal-fired cogeneration plant. The purchase power agreement expired on September 1, 2022 and was not renewed. The AES Hawaii coal plant has ceased operations.
3 Sum of the net peak demands on all islands served, noncoincident and nonintegrated.
Generation statistics. The following table contains certain generation statistics as of and for the year ended December 31, 2025. The net generating and firm purchased capability available for operation at any given time may be more or less than shown because of capability restrictions or temporary outages for inspection, maintenance, repairs or unforeseen circumstances.
Hawaiian Electric
Hawaii Electric Light
Maui Electric
Island of
Oahu
Island of
Hawaii
Island of
Maui
Island of
Lanai
Island of
Molokai
Total
Net generating and firm purchased capability (MW) as of December 31, 2025 1
Conventional oil-fired steam units
Diesel internal combustion engine
Simple-cycle combustion turbines
Dual train combined-cycle unit
Biodiesel internal combustion engine
Firm contract power 2
Net peak demand (MW) 3
Reserve margin
Annual load factor
MWh net generated and purchased (thousands)
1 Hawaiian Electric units at normal ratings; Hawaii Electric Light and Maui Electric units at reserve ratings.
2 Nonutility generators - Hawaiian Electric: 208 MW (Kalaeloa Partners, L.P., oil-fired) and 68.5 MW (HPOWER, refuse-fired); Hawaii Electric Light: 60 MW (Hamakua Energy, oil-fired) and 34.6 MW (PGV, geothermal). PGV’s current limited capability of 32.2 MW has been incorporated into the utility’s firm contract power capability as of December 31, 2025.
3 Noncoincident and nonintegrated.
Generating reliability and reserve margin. Hawaiian Electric serves the island of Oahu and Hawaii Electric Light serves the island of Hawaii. Maui Electric has three separate electrical systems—one each on the islands of Maui, Molokai and Lanai. Hawaiian Electric, Hawaii Electric Light and Maui Electric have isolated electrical systems that are not currently interconnected to each other or to any other electrical grid and, thus, each maintains a higher level of reserve generation and cost structure than is typically carried by interconnected mainland U.S. utilities, which are able to share reserve capacity. These higher levels of reserve margins are required to meet peak electric demands, to provide for scheduled maintenance of generating units (including the units operated by IPPs relied upon for firm capacity) and to allow for the forced outage of the largest generating unit in the system.
Nonutility generation. The Utilities have supported state and federal energy policies which encourage the development of renewable energy sources that reduce the use of fuel oil as well as the development of qualifying facilities. The Utilities’ renewable energy sources and potential sources range from wind, solar, photovoltaic, geothermal, wave and hydroelectric power to energy produced by municipal waste and other biofuels.
The rate schedules of the Utilities contain ECRCs and PPACs that allow them to recover costs of fuel and purchase power expenses.
In addition to the firm capacity PPAs described below, the Utilities also purchase energy on an as-available basis directly from nonutility generators and through its Feed-In Tariff programs, as well as through renewable dispatchable generation power purchase agreements. The Utilities also receive renewable energy from customers under its customer-sited Distributed Energy Resources programs.
The PUC has allowed rate recovery for the firm capacity and purchased energy costs for the Utilities’ approved firm capacity and as-available energy PPAs.
Hawaiian Electric firm capacity PPAs . Hawaiian Electric currently has two major firm capacity PPAs that provide a total of 276.5 MW of firm capacity, representing 19% of Hawaiian Electric’s total net generating and firm purchased capacity on the Island of Oahu as of December 31, 2025.
Under the 2021 Amended and Restated PPA with Kalaeloa Partners, L.P. (Kalaeloa), Hawaiian Electric is committed to purchase 208 MW of firm capacity. The Kalaeloa facility, which is a Qualifying Facility (QF), is a combined-cycle operation,
consisting of two oil-fired combustion turbines burning low sulfur fuel oil (LSFO) and a steam turbine that utilizes waste heat from the combustion turbines. The PPA, among other provisions, extends the term for ten contract years after the effective date. The ARPPA was approved on November 23, 2022 and the rates under the ARPPA became effective on January 1, 2023.
Hawaiian Electric also entered into a PPA in March 1986 and a firm capacity amendment in April 1991 with the City and County of Honolulu with respect to a refuse-fired plant (HPOWER). Under the PPA, as amended and restated, Hawaiian Electric is committed to purchase 68.5 MW of firm capacity annually up until the PPA expires on April 2, 2033.
Hawaii Electric Light firm capacity PPAs . Hawaii Electric Light has two major firm capacity PPAs that provide a total of 92.2 MW of firm capacity, representing 37% of Hawaii Electric Light’s total net generating and firm purchased capacity on the Island of Hawaii as of December 31, 2025.
In October 1997, Hawaii Electric Light entered into an agreement with Encogen, which was succeeded by Hamakua Energy Partners, L. P. (HEP). The agreement requires Hawaii Electric Light to purchase up to 60 MW (net) of firm capacity for a period of 30 years, expiring on December 31, 2030. The dual-train combined-cycle facility consists of two oil-fired combustion turbines and a steam turbine that utilizes waste heat from the combustion turbines, which primarily burns naphtha (a mixture of liquid hydrocarbons) and, starting in late 2019, biodiesel (comprising approximately 40% of HEP’s generation in 2025). In November 2017, Hamakua Energy, an indirect subsidiary of HEI, purchased the plant from HEP. On February 7, 2025, the parent company of Hamakua Holdings, LLC, an indirect subsidiary of HEI and parent company of Hamakua Energy, entered into a Securities Purchase Agreement to sell all the membership interests in Hamakua Holdings, LLC to an unaffiliated third party. The sale closed on March 10, 2025. See “Sale of Hamakua Holdings, LLC” in Note 3 of the Consolidated Financial Statements.
Hawaii Electric Light has a 35-year PPA, as amended, with Puna Geothermal Venture (PGV) for 34.6 MW of firm capacity from its geothermal steam facility, which will expire on December 31, 2027. In December 2019, Hawaii Electric Light entered into an Amended and Restated PPA (ARPPA) with PGV to, among other things, extend the term by 25 years to 2052 and expand the firm capacity capable of being delivered to 46 MW. The ARPPA was approved by the PUC subject to certain conditions on December 29, 2023.
Maui Electric firm capacity PPAs . Maui Electric currently has no firm capacity PPAs.
Fuel oil usage and supply. The rate schedules of the Utilities include ECRCs under which electric rates (and consequently the revenues of the electric utility subsidiaries generally) 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. See discussion of rates and issues relating to the ECRC below under “Rates.”
Hawaiian Electric’s steam generating units consume LSFO and Hawaiian Electric’s combustion turbine peaking units consume diesel. Hawaiian Electric’s Schofield Generating Station consumes mostly B99 grade biodiesel, but is permitted to also burn ultra-low sulfur diesel (ULSD).
Hawaii Electric Light’s and Maui Electric’s steam generating units burn high sulfur fuel oil (HSFO) and Hawaii Electric Light’s and Maui Electric’s Maui combustion turbine generating units burn diesel. Hawaii Electric Light’s and Maui Electric’s Maui, Molokai, and Lanai diesel engine generating units burn ULSD.
See “Fuel contracts” in Hawaiian Electric’s MD&A.
The following table sets forth the average cost of fuel oil used by Hawaiian Electric, Hawaii Electric Light and Maui Electric to generate electricity in 2025, 2024 and 2023:
Hawaiian Electric
Hawaii Electric Light
Maui Electric
Consolidated
$/Barrel
¢/MBtu
$/Barrel
¢/MBtu
$/Barrel
¢/MBtu
$/Barrel
¢/MBtu
The average per-unit cost of fuel oil consumed to generate electricity for Hawaiian Electric, Hawaii Electric Light and Maui Electric reflects a different volume mix of fuel types and grades as follows:
Hawaiian Electric
Hawaii Electric Light
Maui Electric
% LSFO
% Biodiesel/Diesel
% HSFO
% Diesel
% HSFO
% Diesel
The prices that Hawaiian Electric and Hawaii Electric Light pay for purchased energy from certain older nonutility generators are generally linked to the price of oil. The energy prices for Kalaeloa, which purchases LSFO from Par Hawaii Refining, LLC (PAR), vary primarily with the price of Asian crude oil. On December 31, 2019, Hawaii Electric Light and PGV entered into an Amended and Restated Power Purchase Agreement, which delinks the pricing for energy delivered from the facility from fossil fuel prices. Hamakua Energy’s energy prices vary primarily with the cost of naphtha.
The Utilities estimate that 73% of the net energy they generate will come from fossil fuel oil in 2026 compared to 69% in 2025. Hawaiian Electric generally maintains an average system fuel inventory level equivalent to 47 days of forward consumption. Hawaii Electric Light and Maui Electric generally maintain an average system fuel inventory level equivalent to approximately one month’s supply of both HSFO and diesel.
Rates. Hawaiian Electric, Hawaii Electric Light and Maui Electric are subject to the regulatory jurisdiction of the PUC with respect to rates, issuance of securities, accounting and certain other matters. See “Regulation” below.
General rate increases require the prior approval of the PUC after public and contested case hearings. Rates for Hawaiian Electric and its subsidiaries include ECRCs, and PPACs. Under current law and practices, specific and separate PUC approval is not required for each rate change pursuant to automatic rate adjustment clauses previously approved by the PUC. Public Utility Regulatory Policies Act of 1978 (PURPA) requires the PUC to periodically review the adjustment clauses related to energy cost of electric and gas utilities in the state, and such clauses, as well as the rates charged by the utilities generally, are subject to change. PUC approval is also required for all surcharges and adjustments before they are reflected in rates.
See “Utility projects” under “Commitments and contingencies” in Note 4 of the Consolidated Financial Statements.
Competition. See “Competition” in Hawaiian Electric’s MD&A.
Regulation. The PUC regulates the rates, issuance of securities, accounting and certain other aspects of the operations of Hawaiian Electric and its electric utility subsidiaries. See the previous discussion under “Rates.”
Electrification of Transportation . In June 2018, the PUC initiated a proceeding to review the Utilities’ Electrification of Transportation (EoT) Strategic Roadmap, which provided an economic analysis for light duty electric vehicles on the island of Oahu, Maui and Hawaii. In October 2019, the Utilities filed their EoT Workplan, establishing a schedule to continue implementation of the EoT roadmap with a focus on Electric Vehicle (EV) rate design and make ready charging infrastructure in the near term. The Utilities subsequently filed an update in May 2024, called the EoT Strategic Roadmap 2.0 to reflect changes to market conditions since 2018 and identifies potential utility EoT actions through 2030, through input from community and industry experts.
The Utilities followed through on the EoT Workplan, with three filings: the electric bus make ready infrastructure pilot, Charge Ready Hawaii commercial infrastructure pilot, and two commercial EV rates, EV-J and EV-P. The Utilities completed the 18-month Smart Charge Hawaii Telematics pilot in December 2024.
The Utilities operate 32 public Direct Charge fast chargers as part of the EV-U and EV-MAUI tariff. On June 26, 2025, the PUC issued an order granting the Utilities’ request to make EV-U a regular tariff from a pilot, and modified the allowable accounts from 25 to 50.
The Utilities are committed to electrifying 100% of their class 1 vehicles (sedans, SUVs and light trucks) by 2035. As of December 31, 2025, 21% of class 1 vehicles are EVs.
Renewable Portfolio Standards. Hawaii’s RPS law requires electric utilities to meet an RPS of 15%, 30%, 40%, 70% and 100% by December 31, 2015, 2020, 2030, 2040 and 2045, respectively, counting only electrical generation using renewable energy as a source. 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 would have been 39.1% under the prior method versus 31.8% under the revised method. The change in the definition is to be applied prospectively to future milestone measurements 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 to exceed the 2030 RPS requirement of 40%. The ability of the Utilities to meet RPS milestones after 2030 may be impacted by the Utilities’ current credit ratings, which may impact independent power producers’ ability to secure low-cost financing. In 2025, the Utilities’ RPS was 36.8%.
Affiliate transactions . Certain transactions between HEI’s electric public utility subsidiaries (Hawaiian Electric, Hawaii Electric Light and Maui Electric) and HEI and affiliated interests (as defined by statute) are subject to regulation by the PUC.
The PUC issued an order requiring Hawaiian Electric to continue to provide the PUC with annual status reports on its compliance with the PUC Agreement (pursuant to which HEI became the holding company of Hawaiian Electric) and to present a comprehensive analysis of the impact that the holding company structure and investments in nonutility subsidiaries have on a case-by-case basis on the cost of capital to each utility in future rate cases to support Hawaiian Electric’s position that its access to capital did not suffer as a result of HEI’s involvement in nonutility activities and that HEI’s diversification did not permanently raise or lower the cost of capital incorporated into the rates paid by Hawaiian Electric’s utility customers.
The PUC also established a set of requirements governing transactions and sharing of information between the Utilities and its affiliates (Affiliate Transaction Requirements or ATRs), which intended to establish safeguards to avoid potential market power benefits and cross-subsidization between regulated and unregulated activities. The requirements include rules on interactions with affiliates, information handling, business development, political activities, promotional activities, sales of products and services, and employee sharing restrictions. The ATRs include implementing an internal code of conduct, a compliance plan, including policies and procedures to comply with the requirements, and having an audit conducted every three years that examines the compliance with the requirements. Penalties for non-compliance depend on the severity of the violation, and can range from daily fines to divestiture of the Utilities by the holding company. The ATRs also require independent compliance audits be conducted every three years, the first of which was completed in 2022 and found no findings of noncompliance for the period of December 2018 to December 2021. The PUC accepted the first ATRs audit report while ordering certain governance improvement opportunities that the Company implemented in 2023. The second triennial audit which reviewed ATRs compliance from January 2022 to December 2024 was completed and had no findings of noncompliance. The Utilities submitted the final report to the PUC in October 2025.
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.
Other regulations. The Utilities are not subject to regulation by the FERC under the Federal Power Act, except under Sections 210 through 212 (added by Title II of PURPA and amended by the Energy Policy Act of 1992), which permit the FERC to order electric utilities to interconnect with qualifying cogenerators and small power producers, and to wheel power to other electric utilities. Title I of PURPA, which relates to retail regulatory policies for electric utilities, and Title VII of the Energy Policy Act of 1992, which addresses transmission access, also apply to the Utilities. The Utilities are also required to file various operational reports with the FERC.
Because they are located in the State of Hawaii, Hawaiian Electric and its subsidiaries are exempt by statute from limitations set forth in the Powerplant and Industrial Fuel Use Act of 1978 on the use of petroleum as a primary energy source.
Regulatory Developments . See “Regulatory proceedings” in Note 4 of the Consolidated Financial Statements for additional discussions.
See also “HEI Consolidated–Regulation” above.
Environmental regulation . Hawaiian Electric, Hawaii Electric Light and Maui Electric, like other utilities, are subject to periodic inspections by federal, state and, in some cases, local environmental regulatory agencies, including agencies responsible for the regulation of water quality, air quality, hazardous and other waste and hazardous materials. These
inspections may result in the identification of items needing corrective or other action. Except as otherwise disclosed in this report (see “Risk Factors” in Item 1A, and Notes 1 and 4 of the Consolidated Financial Statements), the Utilities believe that each subsidiary has appropriately responded to environmental conditions requiring action and that, as a result of such actions, such environmental conditions will not have a material adverse effect on the capital expenditures, earnings and competitive position of the Utilities.
Water quality controls. The generating stations, substations and other utility facilities operate under federal and state water quality regulations and permits, including, but not limited to, the Clean Water Act National Pollution Discharge Elimination System (governing point source discharges, including wastewater and storm water discharges) and the Safe Drinking Water Act Underground Injection Control (regulating disposal of wastewater into the subsurface).
Oil pollution controls. The Oil Pollution Act of 1990 (OPA) establishes programs that govern actual or threatened oil releases and imposes strict liability on responsible parties for clean-up costs and damages to natural resources and property. The federal Environmental Protection Agency (EPA) regulations under OPA require certain facilities that use or store oil to prepare and implement Spill Prevention, Control and Countermeasures (SPCC) Plans in order to prevent releases of oil to navigable waters of the U.S. Certain facilities are also required to prepare and implement Facility Response Plans (FRPs) to ensure prompt and proper response to releases of oil. The utility facilities that are subject to SPCC Plan and FRP requirements have prepared and implemented SPCC Plans and FRPs.
Air quality controls. The Clean Air Act (CAA) establishes permitting programs to reduce air pollution. The CAA amendments of 1990, established the federal Title V Operating Permit Program (in Hawaii known as the Covered Source Permit program) to ensure compliance with all applicable federal and state air pollution control requirements. The 1977 CAA Amendments established the New Source Review (NSR) permitting program, which affect new or modified generating units by requiring a permit to construct under the CAA and the controls necessary to meet the National Ambient Air Quality Standards.
Title V operating permits have been issued for all of the Utilities’ affected generating units.
Hazardous waste and toxic substances controls. The operations of the electric utility are subject to EPA regulations that implement provisions of the Resource Conservation and Recovery Act (RCRA), the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA, also known as Superfund), the Superfund Amendments and Reauthorization Act (SARA), and the Toxic Substances Control Act (TSCA) as well as equivalent State laws and regulations.
RCRA underground storage tank (UST) regulations require all facilities that use USTs for storing petroleum products to comply with established leak detection, spill prevention, standards for tank design and retrofits, financial assurance, operator training, and tank decommissioning and closure requirements. All of the Utilities’ USTs currently meet the applicable requirements.
The Emergency Planning and Community Right-to-Know Act under SARA Title III requires the Utilities to report potentially hazardous chemicals present in their facilities in order to provide the public with information so that emergency procedures can be established to protect the public in the event of hazardous chemical releases. Since January 1, 1998, the steam electric industry category has been subject to Toxics Release Inventory (TRI) reporting requirements.
The TSCA regulations specify procedures for the handling and disposal of polychlorinated biphenyls (PCBs), a compound found in some transformer and capacitor dielectric fluids. The TSCA regulations also apply to responses to releases of PCBs to the environment. The Utilities have instituted procedures to monitor compliance with these regulations and have implemented a program to identify and replace PCB transformers and capacitors in their systems.
Hawaii’s Environmental Response Law (ERL), as amended, governs releases of hazardous substances, including oil, to the environment in areas within the state’s jurisdiction. Responsible parties under the ERL may be jointly, severally, and strictly liable for a release of a hazardous substance. Responsible parties include owners or operators of a facility where a hazardous substance is located and any person who at the time of disposal of the hazardous substance owned or operated any facility at which such hazardous substance was disposed.
The Utilities periodically discover leaking oil-containing equipment such as USTs, piping, and transformers. Each subsidiary reports releases from such equipment when and as required by applicable law and addresses the releases in compliance with applicable regulatory requirements.
State and Federal Endangered Species Act. Under the State and Federal Endangered Species Acts species that are listed as threatened or endangered are to be protected from harm. Various activities of the Utilities including vegetation management, operations, construction, and the presence of infrastructure in sensitive areas may have the potential to affect such species. The Utilities have developed best management practices, protocols and in some areas are developing habitat conservation plans and obtaining related permits to help protect these species.
Additional information. For additional information about Hawaiian Electric, see Hawaiian Electric’s MD&A, Hawaiian Electric’s “Quantitative and Qualitative Disclosures about Market Risk” and Hawaiian Electric’s Consolidated Financial Statements, including the Notes thereto.
Properties. As of December 31, 2025, the Utilities’ ownership in generating assets was as follows:
Property
Location (island)
Principal Fuel Type
Generating Capacity (MW)
Status
Hawaiian Electric:
Waiau 1,2
Oahu
LSFO / Diesel
Active
Kahe 1
Oahu
LSFO
Active
Campbell Industrial Park (CIP) 1
Oahu
Diesel
Active
Honolulu Power Plant 1
Oahu
Retired in 2023
Schofield Generating Station 3
Oahu
Biodiesel / ULSD
Active
West Loch PV Project 4
Oahu
Renewable (Solar)
Active
Hawaii Electric Light 5 :
Shipman
Hawaii
Retired in 2015
Waimea
Hawaii
ULSD
Active
Keahole 6
Hawaii
Diesel / ULSD
Active
Puna
Hawaii
HSFO / Diesel
Active
Hill/Kanoelehua 7
Hawaii
HSFO / ULSD
Active
Distributed generators at substation sites 8
Hawaii
ULSD
Active
Maui Electric 9 :
Kahului
Maui
HSFO
Active
Maalaea 10
Maui
Diesel / ULSD
Active
Miki Basin
Lanai
ULSD
Active
Palaau
Molokai
ULSD
Active
Distributed generators at substation sites
Maui
ULSD
Active
1 The four plants are situated on Hawaiian Electric-owned land having a combined area of 542 acres.
2 Waiau Units 3 and 4 were retired on December 31, 2024.
3 Hawaiian Electric has a 35-year land lease on 8.13 acres, effective September 1, 2016 (with an option to extend an additional 10 years), with the Department of the Army.
4 Hawaiian Electric has a 37-year land lease on 102 acres, effective July 1, 2017, with the Secretary of the Navy.
5 The plants are situated on Hawaii Electric Light-owned land having a combined area of approximately 44 acres. The distributed generators are located within Hawaii Electric Light-owned substation sites having a combined area of approximately four acres.
6 One of the generators (CT2, 13.8 MW) is currently inactive.
7 One of the generators (CT1, 11.5 MW) is currently inactive.
8 One of the four distributed generators (Panaewa D24, 1.25 MW) was damaged in a substation fire in January 2024.
9 The four plants are situated on Maui Electric-owned land having a combined area of 60.7 acres. The distributed generators are located within Maui Electric-owned substation sites having a combined area of approximately three acres.
10 One of the generator’s (M11, 12.50 MW) gear train was damaged in April 2025 and was placed on inactive status in January 2026.
As of December 31, 2025, the Utilities’ ownership in fuel storage facilities was as follows:
Facility
Location (island)
Fuel Type
Capacity (barrels in thousands)
Generation Serviced
Hawaiian Electric:
Barbers Point Tank Farm
Oahu
LSFO
Kahe, Waiau
Generation sites - various (in aggregate)
Oahu
LSFO
Various
Generation sites - various (in aggregate)
Oahu
Diesel
Various
Generation sites - various (in aggregate)
Oahu
Biodiesel
Various
Hawaii Electric Light 1 :
Generation sites - various (in aggregate)
Hawaii
HSFO
Various
Generation sites - various (in aggregate)
Hawaii
Diesel
Various
Maui Electric 2 :
Generation sites - various (in aggregate)
Maui
HSFO
Various
Generation sites - various (in aggregate)
Maui
Diesel
Various
1 There are an additional 19,249 barrels of diesel and 24,675 barrels of HSFO storage capacity for Hawaii Electric Light-owned fuel off-site at Island Energy Services, LLC-owned terminalling facilities.
2 There are an additional 56,358 barrels of diesel oil storage capacity off-site at Aloha Petroleum, Ltd-owned terminalling facilities.
Other properties . The Utilities own overhead transmission and distribution lines, underground cables, pole (some jointly) and metal high voltage towers. Electric lines are located over or under public and nonpublic properties.
Hawaiian Electric owns a total of 126.5 acres of land on which substations, transformer vaults, distribution baseyards and the Kalaeloa cogeneration facility are located. Hawaiian Electric also owns buildings and approximately 11.6 acres of land located in Honolulu, which house its operating and engineering departments. It also leases an office building and certain office spaces in Honolulu, land for office spaces and storage in Pearl City, and a warehousing center in Kapolei.
Hawaii Electric Light owns 6 acres of land in Kona, which is used for a baseyard, and one acre of land in Hilo, which houses its accounting, customer services and administrative offices. Hawaii Electric Light also leases 3.7 acres of land for its baseyard in Hilo under a lease expiring in 2030. In addition, Hawaii Electric Light owns a total of approximately 150 acres of land, and leases a total of approximately 6 acres of land, on which hydro facilities, substations and switching stations, microwave facilities and transmission lines are located. The deeds to the sites located in Hilo contain certain restrictions, but the restrictions do not materially interfere with the use of the sites for public utility purposes.
Maui Electric’s administrative offices, as well as its engineering and distribution departments, are situated on 9.1 acres of Maui Electric-owned land in Kahului. Maui Electric also owns approximately 20 acres of land which house some of its substations, leases approximately 3,600 square feet of land for its telecommunication and microwave facilities, leases approximately 6,000 square feet of land at Kahului Harbor for pipeline purposes, and leases 17,958 square feet of land at Puunene for the Puunene Substation. Maui Electric also owns approximately 87 acres of vacant land, including land used for debris storage, at Waena, Palaau, and Kahului. Fuel storage facilities are located on Maui Electric-owned properties at Kahului Baseyard, Kahului Power Plant, Maalaea Power Plant, Miki Basin, Palaau, Hana, and the Kuihelani Substation. Two, 1-MW stand-by diesel generators are located within the Maui Electric-owned land at Hana Substation. One, 1.83-MW stand-by diesel generator is located within the Maui Electric-owned land at Kuihelani Substation.
See “Hawaiian Electric and subsidiaries and service areas” above for a discussion of the nonexclusive franchises of Hawaiian Electric and subsidiaries.
See “Generation statistics” above for a further discussion of some of the electric utility properties.
ITEM 1A. RISK FACTORS
The businesses of HEI and its subsidiaries involve numerous risks which, if realized, could have a material and adverse effect on the Company’s financial statements. For additional information for certain risk factors enumerated below and other risks of the Company and its operations, see “Cautionary Note Regarding Forward-Looking Statements” above and HEI’s MD&A, HEI’s “Quantitative and Qualitative Disclosures about Market Risk,” the Notes to the Consolidated Financial Statements, Hawaiian Electric’s MD&A and Hawaiian Electric’s “Quantitative and Qualitative Disclosures About Market Risk.”
Holding company and company-wide risks.
Losses resulting from the Maui windstorm and wildfires did and may continue to have a material adverse effect on HEI’s and Hawaiian Electric’s financial condition, liquidity, cash flows and results of operations . 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 Department of Fire and Public Safety and Bureau of Alcohol, Tobacco, Firearms and Explosives reports classified the cause of the fire as “accidental.”
Effective November 1, 2024, HEI and Hawaiian Electric entered into the Settlement Agreements (as defined herein) to settle the tort-related legal claims in the litigation arising out of the Maui windstorm and wildfires. One of the Settlement Agreements, the Class Settlement Agreement (as defined herein) remains subject to final court approval.
HEI and Hawaiian Electric have agreed to make substantial payments to settle all Maui windstorm and wildfire tort-related legal claims if all conditions of the Settlement Agreements are satisfied. 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 for the One ‘Ohana Initiative (a humanitarian aid fund to provide payments outside of litigation to the beneficiaries of those who died, as well as compensation for personal injury damages). The total settlement amount is to be divided between two settlement funds, one for the benefit of individual plaintiffs, and the other for the benefit of the class plaintiffs. 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. 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 the settlements.
If all conditions of the Settlement Agreements are satisfied, HEI expects to finance the settlement payments through a mix of debt, common equity, equity-linked securities or other potential options. While HEI management believes it will be able to raise the capital necessary to finance the settlement payments, there is no assurance that future financing will be available in sufficient amounts, on a timely basis or on reasonable terms acceptable to HEI, if at all.
If HEI’s financing plans are unsuccessful, HEI and Hawaiian Electric may need to consider other strategic alternatives, including delaying strategic initiatives, selling assets, or other strategic measures including, without limitation, obtaining relief under the U.S. Bankruptcy Code. Such alternatives could adversely affect our financial results or other factors impacting our finances, operations or HEI’s stock valuation.
The Settlement Agreements do not resolve claims with insurers who have asserted subrogation claims in separate lawsuits, and such insurers are not parties to the Settlement Agreements, but resolution of their claims through an agreement or a final unappealable court order is a condition to the defendants’ payment obligations under the Settlement Agreements. 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.
If the conditions of the Settlement Agreements are not satisfied or the agreements are otherwise terminated, HEI and Hawaiian Electric intend to vigorously defend against the litigation. There is no assurance that HEI and Hawaiian Electric will be successful in the defense of the litigation or that insurance proceeds will be available to fund any potential settlements, judgments, or costs associated with the litigation.
There can be no assurance that HEI and Hawaiian Electric will have the liquidity to make the payments required under the Settlement Agreements. The amount of any liability arising from the Maui windstorm and wildfires could have a material adverse impact on our financial condition, liquidity, cash flows and results of operations.
HEI’s and Hawaiian Electric’s access to lower cost sources of capital will continue to be negatively impacted as a result of the downgrades in their debt credit ratings to below investment grade . In August 2023, HEI and Hawaiian Electric received
multiple downgrades to their debt, including to ratings below investment grade, by Fitch, Moody’s and S&P. As of February 17, 2026, the Fitch, Moody’s and S&P ratings of HEI and Hawaiian Electric were as follows:
Fitch
Moody’s
HEI:
Long-term issuer default, long-term corporate family and issuer credit, respectively
Short-term issuer default, commercial paper and commercial paper, respectively
Outlook
Positive
Positive
Watch Positive
Hawaiian Electric:
Long-term issuer default, long-term and issuer credit, respectively
Short-term issuer default, commercial paper and commercial paper, respectively
Senior unsecured debt/special purpose revenue bonds
Cumulative preferred stock (selected series)
Outlook
Positive
Positive
Watch Positive
1 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.
Unless and until these debt ratings are upgraded to investment grade, the Company will continue to have restricted access to lower cost sources of capital. Recent projects, such as, wildfire mitigation plan, grid modernization, reliability and resilience all require significant capital expenditures to implement. The Company may not be able to obtain the necessary financing to achieve its business objectives as a result of the downgrades. Accordingly, the Company’s financial condition, liquidity, cash flows and results of operations may be adversely impacted if debt credit ratings are maintained at below investment grade for an extended period of time.
HEI’s and Hawaiian Electric’s credit ratings only reflect the view, at the time the ratings are issued, of the applicable rating agency. There is no assurance that any such credit rating will remain in effect for any given period of time or that such rating will not be lowered, suspended or withdrawn entirely by the applicable rating agency if, in such rating agency’s judgment, circumstances, such as current, past or future effects or events so warrant. Any such lowering, suspension or withdrawal of any rating may have an adverse effect on the availability of capital to the Company or the market price or marketability of HEI’s and/or Hawaiian Electric’s securities, which could increase the cost of capital of HEI and Hawaiian Electric, and such increased costs, including interest charges, under HEI’s and/or Hawaiian Electric’s debt securities and credit facilities, would result in reductions in HEI’s consolidated net income in future periods. Because HEI’s and Hawaiian Electric’s credit ratings were downgraded, HEI and Hawaiian Electric are unable to sell commercial paper and were required to draw on more expensive bank lines of credit and prioritize capital and other expenditures. Neither HEI nor Hawaiian Electric management can predict the duration of the downgrades and future rating agency actions or their effects on the future cost of capital of HEI or Hawaiian Electric. 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.
Extreme weather events and other natural disasters, particularly those exacerbated by evolving climate dynamics such as the Maui windstorm and wildfires, could materially affect Hawaiian Electric’s assets and infrastructure, particularly if such infrastructure is damaged or is found to have contributed to other catastrophic events such as a wildfire . Extreme weather-related incidents and other natural disasters, including volcanic eruptions, mudslides, hurricanes, tsunamis and other storms, can interfere with the generation and transmission of electricity, and can seriously damage the infrastructure necessary to deliver electricity to customers. Damage to Hawaiian Electric’s infrastructure can also cause or contribute to additional loss through events such as wildfires. These risks are increasing, as evolving climate dynamics have exacerbated some of the conditions that lead to these extreme weather events and natural disasters. Such an event can result in lost revenue and increased expenses for the Utilities, but it also can result in regulatory penalties and disallowances if Hawaiian Electric is unable to restore power on a timely basis. Also, an extreme event can lead to significant claims for damages, including for loss of life and property, and has been the case with the Maui windstorm and wildfires. Therefore, these events could have a material adverse effect on the Company’s business, reputation, financial condition and results of operations.
Holding Company Risk—HEI is a holding company that derives its income from its principal operating subsidiary, Hawaiian Electric, and depends on the ability of Hawaiian Electric to pay dividends or make other distributions to HEI and on its own ability to raise capital . HEI is a legal entity separate and distinct from its subsidiaries. As a holding company, HEI’s cash flows and consequent ability to service its obligations and pay dividends on its common stock is dependent upon its receipt of dividends or other distributions from Hawaiian Electric and its ability to issue common stock or other equity securities and to incur additional debt. A material reduction or delay in dividends or other distributions by Hawaiian Electric for an extended period of time, such as a continuation or expansion of the reduction in dividends that HEI currently is experiencing due to the Maui windstorm and wildfires, could have a material adverse effect on the Company’s business, financial condition and results of operations. The ability of Hawaiian Electric to pay dividends or make other distributions to HEI, in turn, is subject to the risks associated with their operations and to contractual and regulatory restrictions, including:
• the provisions of an HEI agreement with the PUC (PUC Agreement), which could limit the ability of HEI’s principal electric public utility subsidiary, Hawaiian Electric, to pay dividends to HEI in the event that the consolidated common stock equity of the Utilities falls below 35% of total capitalization of the Utilities. As of December 31, 2025, the consolidated common stock equity of HEI’s electric utility subsidiaries was 42% of their total capitalization based on the current definition under the PUC Agreement and, as a result, the Utilities are restricted in cash payment of their dividend to HEI at this time (see Note 15 of the Consolidated Financial Statements.); and
• the provisions of debt instruments of HEI and its subsidiaries.
Credit and Capital Market Risk—The Company, and its lowered credit rating, is subject to risks associated with the Hawaii economy, including catastrophic events such as the Maui windstorm and wildfires (in the aggregate and on an individual island basis), volatile U.S. capital markets and changes in the interest rate and credit market environment that have or could result in higher retirement benefit plan funding requirements and restrictions on the ability of HEI or its subsidiaries to borrow money or issue securities . The two largest components of Hawaii’s economy are tourism and the federal government (including the military). Because the core businesses of HEI’s subsidiaries are providing local public electric utility services (through Hawaiian Electric and its subsidiaries), the Company’s operating results are significantly influenced by: Hawaii’s economy, which in turn is influenced by economic conditions in the mainland U.S. (particularly California) and Asia (particularly Japan) as a result of the impact of those conditions on tourism; by the impact of interest rates on the construction and real estate industries and by the impact of federal government spending in Hawaii, which can be affected by world conditions; and, from time to time, the expiration of federal government appropriations bills. In addition, the Hawaii economy could be directly or indirectly affected by implications and potential impacts of U.S. and foreign capital and credit market conditions and federal, state and international responses to those conditions and the potential impacts of global and local developments (including economic conditions and uncertainties; unrest, terrorist acts, wars (such as the Russia-Ukraine war), conflicts, political protests, deadly virus epidemic, pandemics, or other crisis; the effects of changes that have or may occur in U.S. policy, such as with respect to immigration and trade).
Changes in the U.S. capital markets can also have significant effects on the Company. For example, pension funding requirements are affected by the market performance of the assets in the master pension trust maintained for pension plans, and by the discount rate used to estimate the service and interest cost components of net periodic pension cost and value obligations. The Utilities’ pension tracking mechanisms help moderate pension expense; however, a significant reduction in the discount rate or in the value of the Company’s defined benefit pension plan assets could result in a substantial increase in the gap between the projected benefit obligations under the plans and the value of plan assets, resulting in increases in funding requirements.
HEI and the Utilities are also exposed to interest rate risk primarily due to their periodic borrowing requirements, the discount rate used to determine pension funding requirements and the possible effect of interest rates on the Utilities’ rates of return. Interest rates are sensitive to many factors, including general economic conditions and the policies of government and regulatory authorities. HEI cannot predict future changes in interest rates, nor be certain that interest rate risk management strategies it or its subsidiaries have implemented will be successful in managing interest rate risk.
There may be future conditions or events that raise substantial doubt about our ability to continue as a going concern, and it is possible that any plan developed to alleviate such doubt may be unsuccessful. In addition, any capital raised may result in dilution to our current shareholders . For the year ended December 31, 2024, the Company incurred losses from continuing operations of approximately $1.32 billion. For the year ended December 31, 2024, the Utilities incurred net losses of approximately $1.23 billion. The net losses for the year ended December 31, 2024, were primarily due to the accruals of estimated wildfire liabilities in the second and third quarters of 2024, totaling approximately $1.92 billion related to the Maui windstorm and wildfire tort-related legal claims. The Company previously disclosed in its Quarterly Report on Form 10-Q for the quarter ending June 30, 2024, that based on its financial and liquidity condition, and because it had not yet implemented a capital financing plan to address proposed wildfire settlement payments, there was substantial doubt about HEI’s and the Utilities’ ability to continue as a going concern. In the third quarter of 2024, the Company was able to alleviate the conditions that caused the substantial doubt about HEI’s and the Utilities’ ability to continue as a going concern.
Management believes 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 asset-based lending facility (ABL Facility) (see Note 6 of the Consolidated Financial Statements included herein), additional liquidity under HEI’s registered at-the-market offering program as well as expenditure reduction efforts effectively alleviate any conditions that may cause substantial doubt regarding HEI’s and Utilities’ ability to continue as a going concern. 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 plans that have been implemented have mitigated the conditions that previously caused the substantial doubt about HEI’s and the Utilities’ ability to continue as a going concern as of the date of filing their 2024 second quarter financial statements. 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.
The recurrence of any substantial doubt about HEI’s and the Utilities’ ability to continue as a going concern may affect the price of our common stock, may impact our relationship with third parties with whom the Company does business, including our vendors, lenders and employees, may impact our ability to raise additional capital or refinance existing debt and may impact our ability to comply, going forward, with certain covenants in our debt agreements and/or satisfy conditions to draw thereunder, which could significantly and materially restrict our operations.
If a court-approved definitive settlement agreement to resolve Maui windstorm and wildfire tort-related legal claims is not obtained, or if financing for settlement payments is not available, the Company may need to consider other alternatives for addressing the outstanding legal claims or settlement payments, and such alternatives could adversely affect our financial results or other factors impacting our finances, operations or stock valuation . As described more fully in Note 2 of the Consolidated Financial Statements included herein, the Company entered into Settlement Agreements effective November 1, 2024, to resolve all Maui windstorm and wildfire tort-related legal claims, including all claims among the defendants. Such Settlement Agreements are subject to court approval, and other conditions including resolution of the claims of the insurance companies that have paid claims for property loss and other damages. If all conditions of the Settlement Agreements are satisfied, the Company has agreed to make substantial payments to settle all Maui windstorm and wildfire tort-related legal claims. As described more fully in Note 2 of the Consolidated Financial Statements included herein, if the conditions of the Settlement Agreements are not satisfied or the agreements are otherwise terminated, the Company intends to vigorously defend against the litigation. There is no assurance that the Company will be successful in the defense of the litigation or that insurance proceeds will be available to fund any potential settlements, judgments, or costs associated with the litigation.
If all conditions of the Settlement Agreements are satisfied, the Company expects to finance the settlement payments through a mix of debt, common equity, equity-linked securities or other potential options. While management believes the Company will be able to raise the capital necessary to finance the settlement payments, there is no assurance that future financing will be available in sufficient amounts, on a timely basis or on reasonable terms acceptable to us, if at all.
If the Company’s financing plans are unsuccessful, the Company may need to consider other strategic alternatives, including delaying strategic initiatives, selling assets, or other strategic measures including, without limitation, obtaining relief under the U.S. Bankruptcy Code. Such alternatives could adversely affect our financial results or other factors impacting our finances, operations or stock valuation.
Shareholders of HEI’s common stock may experience future dilution as a result of future equity offerings . In order to raise additional capital, including capital necessary to fund litigation settlement expenses, the Company may in the future offer additional shares of HEI’s Common Stock or other securities convertible into or exchangeable for HEI Common Stock at prices that may not be the same as the current market price per share, and investors purchasing shares or other securities in the future could have rights superior to existing stockholders. The price per share at which the Company may sell additional shares of HEI Common Stock, or securities convertible or exchangeable into HEI Common Stock, in future transactions may be higher or lower than the current market price per share of HEI Common Stock.
In addition, any future sales of a substantial number of shares of HEI Common Stock in the public market, or the perception that such sales may occur, could adversely affect the price of HEI Common Stock. The Company cannot predict the effect, if any, that market sales of those shares of Common Stock, or the perception that those shares may be sold, will have on the market price of HEI Common Stock. Further, the Company may not have the ability to raise the amount of capital necessary on reasonable terms, or at all, to fund our contribution to the Maui wildfire tort litigation settlement, and uncertainties about the Company’s access to capital could have a material adverse effect on the market price of HEI Common Stock.
The Company does not expect to pay any dividends on HEI Common Stock in the foreseeable future . The Company does not currently intend to pay dividends on HEI Common Stock and currently intends to retain future earnings, if any, to fund the development and growth of the Company’s business and to fund future settlement payments of the tort-related legal claims in the litigation arising out of the Maui windstorm and wildfires. In addition, the terms of certain existing and any future debt agreements may preclude the Company from paying dividends on HEI Common Stock. As a result, capital appreciation, if any, of HEI Common Stock may be your sole source of gain for the foreseeable future.
Tax Legislation Risk—Adverse tax rulings or developments or changes in tax legislation could result in significant increases in tax payments and/or expense . Governmental taxing authorities could challenge a tax return position taken by HEI or its subsidiaries and if the taxing authorities prevail, HEI’s consolidated tax payments and/or expense, including applicable penalties and interest, could increase significantly. Additionally, changes in tax legislation or IRS interpretations could increase the Company’s tax burden and adversely affect the Company’s financial position, results of operations, and cash flows.
Geographic Concentration Risk—The Company is subject to the risks associated with the geographic concentration of its businesses and current lack of interconnections that could result in service interruptions at the Utilities . The business of the Utilities is concentrated on the individual islands they serve in the State of Hawaii. Their operations are more vulnerable to service interruptions than that of many U.S. mainland utilities because none of the systems of the Utilities are interconnected with the systems on the other islands they serve. Because of this lack of interconnections, it is necessary to maintain higher generation reserve margins than are typical for U.S. mainland utilities to help ensure reliable service. Service interruptions, including, in particular, extended interruptions that could result from a natural disaster or terrorist activity, could adversely impact the revenues and costs of some or all of the Utilities.
Competitive and Technological Risk—Increasing competition and technological advances could cause HEI’s businesses to lose customers or render their operations obsolete . Certain aspects of the electric utility industry are competitive. The success of HEI’s subsidiaries in meeting competition and responding to technological advances will continue to have a direct impact on HEI’s consolidated financial performance. For example:
• The Utilities face competition from customer self-generation, with or without cogeneration; customer energy storage; wheeling of renewable energy under Senate Bill 589, now known as Act 266, and the potential formation of community-based, cooperative ownership or municipality structures for electrical service on all islands it serves. With the exception of certain identified projects, the Utilities are required to use competitive bidding to acquire a future generation resource unless the PUC finds competitive bidding to be unsuitable. This means that unless exempt, proposed company-owned generation projects must be bid into a request for proposals which is open to IPPs, and be selected under a competitive bidding process. The PUC sets policies for distributed generation interconnection agreements and standby rates. The results of competitive bidding, customer self-generation, wheeling, and potential cooperative ownership or municipality structures for electric utility service, and the rate at which technological developments facilitating nonutility generation of electricity, combined heat and power technology, off-grid microgrids, and customer energy storage may render the operations of the Utilities less competitive or outdated and adversely affect the Utilities and the results of their operations.
Cybersecurity and Physical Security Risk—The Company’s information technology systems and operations could be impacted by a cyber incident, cybersecurity breach, or physical attack that could materially and adversely affect its businesses and reputation . The Company and its subsidiaries rely on information technology systems, some of which are managed or hosted by third party service providers, to manage its business data, communications, and other business processes. Such information technology systems are vulnerable to cyberattacks or other security incidents, which could result in unauthorized access to confidential data, ransomware demands or disruptions to operations. In addition, there is increasing cybersecurity risk associated with the broad adoption of a remote working environment. If the Company is unable to prevent or adequately respond to and resolve an incident, it may have a material impact on the Company’s business, financial condition, results of operations and reputation.
Utilities . The Utilities rely on evolving and complex operational systems and infrastructure and information systems, networks and other technologies, including artificial intelligence and machine learning, which are interconnected with the systems and network infrastructure owned by third parties to support a variety of business processes and activities, including procurement and supply chain, invoicing and collection of payments, customer relationship management, human resource management, the acquisition, generation and delivery of electrical service to customers, and to process financial information and results of operations for internal reporting purposes and to comply with regulatory financial reporting and legal and tax requirements. The Utilities use their systems and infrastructure to create, collect, store, and process sensitive information, including personal information regarding customers, employees and their dependents, retirees, and other individuals. Their systems are vulnerable to disability, failures or unauthorized access caused by natural disasters, physical attacks, cybersecurity incidents, security breaches, user error, unintentional defects created by system changes, military or terrorist actions, nation-
state threat actors, criminal organizations, power or communication failures or similar events. Any such failure could have a material adverse impact on the Utilities’ ability to process transactions and provide service, as well the Utilities’ financial condition and results of operations. Physical attacks targeting physical assets or personnel could cause damage, disrupt operations, or cause injuries. Any failure, interruption, or decrease in the functionality of the Utility’s operational networks could cause harm to the public or employees, significantly disrupt operations, negatively impact the Utility’s ability to operate in a safe and efficient manner, and damage the Utility’s assets or operations or those of third parties. Further, a data breach involving theft, improper disclosure, or other unauthorized access to or acquisition of confidential information could subject the Utilities to penalties for violation of applicable privacy laws, claims by third parties, and enforcement actions by government agencies. A data breach could also reduce the value of proprietary information, and harm the reputation of the Utilities.
Private and public entities, such as the North American Electric Reliability Corporation, and the U.S. federal government, including the Departments of Defense, Homeland Security and Energy, and the White House, have noted that cyberattacks targeting utility systems are increasing in sophistication, magnitude, and frequency. The Utilities’ systems have been, and will likely continue to be, a target of attacks. Further, the Uti lities’ operational networks may be subject to unforeseen operational/cybersecurity risks due to the reliance on legacy operational components or mo dernizing and interconnecting existing infrastructure with new technologies and control systems, including those owned by third parties, such as independent power producers, distributed energy resource aggregators and c ustomers. Although the Utilities have not experienced a material cybersecurity or physical security breach to date, such incidents may occur and may have a material adverse effect on the Utilities and the Company in the future. The Utilities continue to make investments in their cybersecurity and physical security programs, including personnel, technologies, cyber insurance and training of Utilities personnel; however, there can be no assurance that these systems or their expected functionality will be implemented, maintained, or expanded effectively; nor can security measures completely eliminate the possibility of a cybersecurity breach or physical attack. The Utilities maintain cyber liability insurance that covers certain damages caused by cyber incidents. However, there is no guarantee that adequate insurance will continue to be available at rates the Utilities believe are reasonable or that the costs of responding to, and recovering from, a cyber incident will be covered by insurance or recoverable in rates. If the Utilities’ operational technologies or networks were to malfunction or fail or cybersecurity or other security measures were to be breached, the Utilities could suffer financial loss, business disruptions, liability to customers, regulatory intervention or damage to their reputations.
Due to the size, scope and complexity of the Utilities’ business, the development and maintenance of information technology systems to process and track information is critical and challenging. The Utilities often rely on third-party vendors to host, maintain, modify, and update its systems and these third-party vendors could cease to exist, fail to establish adequate processes to protect the Utilities systems and information, experience supply chain compromises or other internal or external security incidents. In addition, the Utilities are pursuing complex business transformation initiatives, which include the implementation of new systems and the upgrade or replacement of existing systems. Significant system changes increase the risk of system interruptions, which may occur. Further, delay or failure to complete the integration of information systems and processes may result in delays in regulatory cost recovery, or the failure to realize the benefits anticipated to be derived from these initiatives.
The Utilities’ disaster recovery plans may not be successful in preventing the loss of customer data, service interruptions and disruptions to operations or damage to important facilities. If any of these systems fail to operate properly or become disabled and the Utilities’ disaster recovery plans do not effectively resolve the issues in a timely manner, the Utilities could suffer financial loss, business disruptions, liability to customers, regulatory intervention or damage to their reputations, any of which could have a material adverse effect on the Utilities’ and the Company’s financial condition and results of operations.
Uninsured Losses—HEI’s businesses could suffer losses that are uninsured due to a lack of affordable insurance coverage, unavailability of insurance coverage or limitations on the insurance coverage the Company does have . In the ordinary course of business, HEI and its subsidiaries purchase insurance coverages (e.g., property and liability coverages) to protect against loss of, or damage to, their properties and against claims made by third parties and employees for property damage or personal injuries. However, the protection provided by such insurance is limited in significant respects and, in some instances, there is no coverage. Some of the insurance coverages have substantial deductibles or have limits on the maximum amounts that may be recovered. In common with other companies in its line of business, the Utilities’ overhead and underground transmission and distribution systems (with the exception of substation buildings and contents), which have a replacement value roughly estimated at $14 billion, are largely not insured against loss or damage because the amount of transmission and distribution system insurance capacity is limited and the premiums are cost prohibitive. Similarly, the Utilities have no business interruption insurance as the premiums for such insurance would be cost prohibitive, particularly since the Utilities are not interconnected to other systems. If a hurricane or other uninsured catastrophic natural disaster were to occur, and if the PUC did not allow the affected Utilities to recover from ratepayers restoration costs and revenues lost from business interruption, the lost revenues and repair expenses could result in a significant decrease in HEI’s consolidated net income or in significant net losses for the affected periods.
Related to damages and costs incurred as a result of the Maui windstorm and wildfires, the Company has property insurance with a total policy limit of $500 million, subject to a $1 million retention, for wildfire damages related to Utility-owned non-generating assets, including overhead transmission and distribution assets within 1,000 feet of such assets. The Company also 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 $0.1 million, respectively, and $145 million directors and officers liability insurance to cover claims related to shareholder and derivative lawsuits, with a retention of $1.0 million. The aggregate damages and costs associated with the Maui windstorm and wildfires could significantly exceed the Company’s policy limits.
Environmental Regulation—Increased federal and state environmental regulation will require an increasing commitment of resources and funds and could result in construction delays or penalties and fines for non-compliance . HEI and its subsidiaries are subject to federal, state and local environmental laws and regulations relating to air quality, water quality, hazardous substances, waste management, natural resources and health and safety, which regulate, among other matters, the operation of existing facilities, the construction and operation of new facilities and the proper cleanup and disposal of hazardous and toxic wastes and substances. These laws and regulations could result in increased capital, operating, and other costs. HEI or its subsidiaries are currently involved in investigatory or remedial actions at current, former or third-party sites and there is no assurance that the Company will not incur material costs relating to these sites. In addition, compliance with these legal requirements requires the Utilities to commit significant resources and funds toward, among other things, environmental monitoring, installation of pollution control equipment, payment of emission fees and natural resource minimization and mitigation costs. These laws and regulations, among other things, require that certain environmental permits be obtained in order to construct or operate certain facilities, and obtaining such permits can entail significant expense and cause substantial construction delays. Also, these laws and regulations may be amended from time to time, including amendments that increase the burden and cost of compliance. For example, emission and/or discharge limits may be tightened, more extensive permitting requirements may be imposed and additional substances may become regulated. In addition, significant regulatory uncertainty exists regarding the impact of federal or state greenhouse gas emission limits and reductions.
If HEI or its subsidiaries fail to comply with environmental laws and regulations, even if caused by factors beyond their control, that failure may result in civil or criminal penalties and fines or the cessation of operations that could have a material adverse on the Company’s financial condition or results of operations.
Electric utility risks.
The following risks are generally specific to Hawaiian Electric, but could have a material adverse effect on the Company’s consolidated results of operations, financial condition and liquidity.
Regulatory Risk—Actions of the PUC are outside the control of the Utilities and could result in inadequate or untimely rate increases, rate reductions or refunds or unanticipated delays, expenses or writedowns in connection with the construction of new projects . The rates the Utilities are allowed to charge for their services and the timeliness of permitted rate increases are among the most important items influencing the Utilities’ results of operations, financial condition and liquidity. The PUC has broad discretion over the rates that the Utilities charge their customers. On December 23, 2020, as part of the D&O establishing the PBR Framework, the PUC established a five-year Multi-year Rate Period (MRP) during which there will be no general rate cases. In the fourth year of the MRP, the PUC began its comprehensive review of the PBR Framework to determine if any modifications or revisions are appropriate. 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. This alternative could be implemented by January 2027. If a satisfactory non-rate case re-basing alternative cannot be achieved, the Utilities would file a rate case in the second half of 2026, utilizing a 2027 test year.
Any adverse decision by the PUC concerning the level or method of determining electric utility rates at the end of the MRP, including the items and amounts that may be included in rate base, the returns on equity or rate base found to be reasonable, the potential consequences of exceeding or not meeting such returns, the denial of exceptional project recovery applications during the MRP, adverse impact of adjustments made to the PBR Framework, decisions on recovery of exogenous items under the PBR Framework, or any prolonged delay in rendering a decision in a rate or other proceeding could have a material adverse effect on Hawaiian Electric’s consolidated results of operations, financial condition and liquidity.
To improve the timing and certainty of cost recovery, the Utilities have received approval of various recovery mechanisms, including an ECRC (which includes a PUC-ordered 98%/2% risk-sharing split between customers and the Utilities for fossil fuel price variations from baseline prices, with a current annual aggregate exposure cap of +/- $3.7 million), a PPAC, and pension and OPEB tracking mechanisms, as well as a decoupling mechanism, an exceptional project recovery mechanism (EPRM) (formerly Major Project Interim Recovery (MPIR) adjustment mechanism), and a Renewable Energy Infrastructure Program surcharge. Any modification or elimination of these cost recovery mechanisms could have a material adverse effect on the Utilities. See “Regulatory mechanisms” in Electric utility’s Business.
Under the PBR Framework, the Utilities’ annual revenue adjustment (ARA) includes a customer dividend consisting of a negative adjustment of 0.22% compounded annually and a flow through of the “pre-PBR” savings commitment from the management audit recommendations developed in the 2020 test year rate case. The ability of the Utilities to recover increasing costs and earn a reasonable return on capital investments not covered by the ARA or not achieving the customer dividend and cost savings commitment could have a material adverse effect on the Utilities. In addition, several existing Performance Incentive Mechanisms (PIMs) remain in effect. The PUC has indicated that in the next phase of PBR review, it will examine modifications to the I-factor and the customer dividend provisions of the ARA, the earnings sharing mechanism, revenue opportunities from the X-factor and the EPRM guidelines, and the PIM portfolio. The assessment of penalties for not achieving performance goals or the failure to achieve PIMs rewards could affect the Utilities’ ability to achieve their allowed ROACEs and also have a material adverse effect on the Utilities.
Related to the Maui windstorm and wildfires, the Utilities obtained PUC approval to defer certain non-labor expenses incurred from August 8, 2023 through December 31, 2025 that are not already a part of base rates. 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. Additionally, 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. See “Performance-based regulation framework” and “Regulatory assets for Maui windstorm and wildfires related costs” in Note 4 of the Consolidated Financial Statements.
Based on the current operations of the Utilities and regulatory framework, including the impact of the approved PBR Framework, the Utilities continue to follow regulatory accounting under Accounting Standards Codification (ASC) 980. Continued accounting in this manner requires that certain criteria relating to the recoverability of such costs through rates be met, including achieved financial results that support the recovery of costs. If events or circumstances change, such that the criteria are no longer satisfied, the Utilities expect that their regulatory assets (amounting to $308 million as of December 31, 2025), net of regulatory liabilities (amounting to $1,444 million as of December 31, 2025), would be charged to the statement of income in the period of discontinuance. See “Performance-based regulation framework” in Note 4 of the Consolidated Financial Statements.
The Utilities could be required to refund, with interest, any revenues collected from customers under interim rate orders in their rate case proceedings and other proceedings that exceed the amounts approved in final orders.
Many public utility projects require PUC approval and various permits (e.g., environmental and land use permits) from other governmental agencies. Difficulties in obtaining, or the inability to obtain, the necessary approvals or permits, or any adverse decision or policy made or adopted, or any prolonged delay in rendering a decision, by an agency with respect to such approvals and permits, can significantly increase project costs or lead to project cancellation. In the event a project does not proceed, or if the PUC disallows cost recovery for all or part of a project, or if project costs exceed caps imposed by the PUC in its approval of the project, project costs may need to be written off in amounts that could result in significant reductions in Hawaiian Electric’s consolidated net income. In addition, as the Utilities may retire fossil fuel generating units before fully recovering of its investment and the PUC disallows recovery of undepreciated costs, the resulting write-offs could have an adverse impact on the Utilities’ results of operations.
Weather Conditions Risk—Electric utility operations are significantly influenced by weather conditions and natural disasters . The Utilities’ results of operations can be affected by the weather and natural disasters. Weather conditions, particularly temperature and humidity, directly impact the demand for electricity. Additionally, severe weather and natural disasters may become more intense and/or frequent because of evolving global climate dynamics. Recent natural disasters such as the Kilauea eruption in 2018, Mauna Loa eruption in 2022, and the Maui windstorm and wildfires in 2023, have disrupted electric utility operations. These types of events can cause outages, property damage and result in significant additional expenses that may not always be recoverable.
Evolving Climate Dynamics Risk—Electric utility operations may be significantly influenced by evolving climate dynamics . While the timing, extent and ultimate effects of evolving climate dynamics cannot be determined with any certainty, such dynamics are predicted to cause sea level rise, which could impact coastal and low-lying areas where much of the Utilities’ electric infrastructure is located. Potential consequences include erosion of beaches, saltwater intrusion into aquifers and surface ecosystems, higher water tables and increased flooding and storm damage due to heavy rainfall. Evolving climate dynamics may also intensify extreme weather conditions including floods, hurricanes, heat waves, and droughts which could increase wildfire risk. These factors along with changes in sea levels, water availability and water quality have the potential to materially and adversely affect the Utilities’ results of operations, financial condition, and liquidity. For example, severe weather and its related impacts could cause significant harm to the Utilities’ physical facilities.
Third Party Performance Risk—Electric utility operations depend heavily on third-party suppliers of fuel and purchased power . The Utilities rely on fuel suppliers and shippers, and IPPs to deliver fuel and power, respectively, in accordance with contractual agreements. Approximately 75% of the net energy generated or purchased by the Utilities in 2025 was generated from the burning of fossil fuel oil, and purchases of power by the Utilities provided about 41% of their total net energy generated and purchased for the same period. Failure or delay by fuel suppliers and shippers to provide fuel pursuant to existing contracts, or failure by a major IPP to deliver as anticipated in its PPA, could disrupt the ability of the Utilities to deliver electricity, affect the Utilities’ maintenance schedules that could affect future reliability and require the Utilities to incur additional expenses to meet the needs of their customers that may not be recoverable. In addition, as the IPP contracts near the end of their terms, there may be less economic incentive for the IPPs to make investments in their units to ensure the availability of their units. Also, as these contractual agreements end, the Utilities may not be able to purchase fuel and power on terms equivalent to the current contractual agreements.
Capacity Risk—The capacity provided by the Utilities’ generating resources and third-party purchased power may not be sufficient to meet customers’ energy requirements . The Utilities rely upon their generating resources and purchased power from third parties to meet their customers’ energy requirements. The Utilities update their generation capacity evaluation each year to determine the Utilities’ ability to meet reasonably expected demands for service and provide reasonable reserves for emergencies and other unplanned events. These evaluations are impacted by a variety of factors, including customer energy demand, energy conservation and efficiency initiatives, economic conditions, and weather patterns. If the capacity provided by the Utilities’ generating resources and third-party purchased power is not adequate relative to customer demand, the Utilities may have to contract to buy more power from third parties, invest in additional generating facilities over the long-term, or extend the operating life of existing utility units. Any failure to meet customer energy requirements could negatively impact the satisfaction of the Utilities’ customers, which could have an adverse impact on the Utilities’ business, reputation and results of operations.
The Energy Reserve Margin, the planning criteria used to determine generation adequacy, is the percentage which the system generation capacity must exceed the system load in each hour. The Utilities’ Energy Reserve Margin is satisfied from 2026 through 2030 with the addition of planned generation and storage resource additions for all islands except for Hawaii Island and Lanai, which forecasts are near or slightly below target levels. The One Big Beautiful Act signed into law by President Trump on July 4, 2025, impacts the ability of recently selected and new wind and solar projects to qualify for federal tax credits. Any loss in renewable energy tax credits will likely result in higher prices for new renewable projects, which rely on such incentives to provide clean, affordable energy. The Utilities have plans to address these issues through managing maintenance schedules of existing generations, and if necessary, may request for voluntary customer conservation during periods of high power demands. The environment for resource planning has increased in complexity and uncertainty and the Utilities will continue using a portfolio approach to meet its obligation to serve. This includes increased renewable energy, energy storage, and other potential options, both supply side and customer programs. If the Utilities are unable to meet customer energy requirements, it could negatively impact the satisfaction of the Utilities’ customers, which could have an adverse impact on the Utilities’ business, reputation and results of operations.
Stakeholder Activism Risk—Electric utility and third-party purchased power projects may be significantly impacted by stakeholder activism . The potential impact of stakeholder activism could increase total utility project costs, and delay the permitting, construction and overall timing or preclude the completion of third-party or utility projects that are required to meet electricity demand, resilience and reliability objectives, and RPS and other climate-related goals. If a utility project cannot be completed, the project costs may need to be written off in amounts that could result in significant reductions in Hawaiian Electric’s consolidated net income and negatively impact its financial condition and liquidity.
Operational Risk—Electric utility generating facilities are subject to operational risks that could result in unscheduled plant outages, unanticipated and/or increased operation and maintenance expenses, increased power purchase costs, and decreased reliability . Operation of electric generating facilities involves certain risks which can adversely affect energy output, efficiency levels, and reliability. Included among these risks are facility shutdowns or power interruptions due to insufficient generation or a breakdown or failure of equipment or processes. In addition, operations could be negatively impacted by interruptions in fuel supply, inability to negotiate satisfactory collective bargaining agreements when existing agreements expire or other labor disputes, inability to comply with regulatory or permit requirements, disruptions in delivery of electricity, operator error, adverse weather or environmental conditions and catastrophic events such as earthquakes, tsunamis, hurricanes, fires, explosions, lava flows, floods or other similar occurrences affecting the Utilities’ generating facilities or transmission and distribution systems.
Workforce Retention Risk—The Utilities may be adversely affected by not being able to attract and retain qualified personnel . The Utilities’ workforce, particularly key executives, are critical to their ability to achieve their business strategies. If the Utilities are unable to successfully attract or retain a skilled workforce, the Utilities may face the risk of disruptions, which could have an adverse impact on the Utilities’ business and results of operations. For example, Act 258 sets forth a condition on the securitization that may prohibit the Utilities from providing any increase in compensation, including any
bonuses, to their officers for a period of time determined by the PUC. The inability to provide reasonable compensation could negatively impact the Utilities’ ability to attract and retain qualified executives.
Legislative Risk—The Utilities may be adversely affected by new legislation, executive orders or administrative actions . The Utilities operations are subject to regulations under a wide variety of federal and state regulations and policies. Changes to federal and state laws, rules, regulations and policies are continuous and ongoing and the federal administration, the U.S. Congress, state legislatures and state administrations may enact and implement new laws, regulations and policies that could adversely and materially affect us. The new federal administration has indicated its intent to implement material changes to the federal government’s structure and operations and to advocate material changes to federal laws, regulations and policies. The Utilities cannot predict future changes in laws, regulations and policies, how they will be implemented and interpreted, or the ultimate effect that this changing environment will have on us. There can be no assurance that laws, regulations and policies will not be changed in ways that have a material adverse effect on the Utilities’ operations, financial condition, results of operations, and cash flows. The federal and state executive branches, Congress, the Hawaii legislature and governmental agencies have adopted, or are considering adopting, a number of measures that will significantly affect the Utilities, as described below.
Renewable Portfolio Standards law . The 2001 Hawaii Legislature adopted a law requiring the Utilities to meet a renewable portfolio standard, which has been amended over the years. The most recent amendment to Hawaii’s RPS law occurred in July 2022, which former Governor Ige signed as 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. The change in the definition is to be applied prospectively to future milestone measurements and will require that the Utilities acquire more renewable energy than under the previous RPS calculation to comply with the RPS milestones. The Utilities are committed to achieving these milestones and met the 2015 and 2020 RPS; however, risks such as potential delays in IPPs being able to deliver contracted renewable energy, it is possible the Utilities may not attain the required renewable percentages in the future, and management cannot predict the future consequences of failure to do so (including potential penalties to be assessed by the PUC). On December 19, 2008, the PUC approved a penalty of $20 for every megawatt-hour (MWh) that an electric utility is deficient under Hawaii’s RPS law. The PUC noted, however, that this penalty may be reduced, in the PUC’s discretion, 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, as described in the RPS law and in an RPS framework adopted by the PUC. In addition, the PUC ordered that the Utilities will be prohibited from recovering any RPS penalty costs through rates.
Renewable energy. In 2007, a measure was passed by the Hawaii legislature stating that the PUC may consider the need for increased renewable energy in rendering decisions on utility matters. Due to this measure, it is possible that, if energy from a renewable source is more expensive than energy from fossil fuel, the PUC may still approve the purchase of energy from the renewable source, resulting in higher costs.
Executive orders . 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.
Evolving climate dynamics and greenhouse gas emissions reduction . National and international concern about evolving climate dynamics and the contribution of greenhouse gas (GHG) emissions (including carbon dioxide emissions from the combustion of fossil fuels) to such dynamics have led to federal legislative and regulatory proposals and action by the State of Hawaii to reduce GHG emissions.
Hawaii Revised Statutes (HRS) § 269-6(b) requires that “in making determinations of the reasonableness of the costs pertaining to electric or gas utility system capital improvements and operations, the PUC shall explicitly consider, quantitatively or qualitatively, the effect of the state’s reliance on fossil fuels on price volatility, export of funds for fuel imports, fuel supply reliability risk, and greenhouse gas emissions.” Based on HRS § 269-6(b) and recent case law discussing the scope of this section, the Utilities are performing GHG analyses to quantitatively or qualitatively describe the GHG emissions of proposed projects involving system capital improvements and operations that are submitted to the PUC for approval. On June 20, 2024, House Bill 2390 was signed into law as Act 54 and took effect on July 1, 2024. Act 54 authorizes the PUC to waive a lifecycle GHG analysis for energy projects that do not involve combustion. On September 18, 2024, the PUC approved the Utilities’ waiver requests for the Stage 3 solar plus storage and wind projects.
In June 2018, House Bill 2182 was signed into law as Act 15 and took effect on July 1, 2018. Among its provisions, Act 15 aligned the state’s clean energy and carbon sequestration efforts with climate initiative goals and established a statewide carbon neutral goal by 2045. Under this Act, efforts would be made to “sequester more atmospheric carbon and greenhouse gases than emitted within the state as quickly as practicable, but no later than 2045.” The Hawaii Climate Change Mitigation and Adaptation Commission, administratively placed under the State Department of Land and Natural Resources, was charged with endeavoring to achieve the target, and giving consideration to the impact of its plans, decisions and strategies on the state’s
ability to attain the goal. The general functions, duties and powers of the Hawaii Climate Change Mitigation and Adaptation Commission are set forth in HRS § 225P-3. To achieve its mandates, the Hawaii Climate Change Mitigation and Adaptation Commission may recommend plans, decisions and strategies that could have an impact on various entities including the Utilities. In July 2022, House Bill 1800 was signed into law as Act 238 and took effect on July 1, 2022. The Act established a goal for the statewide greenhouse gas emissions limit to be at least 50% below 2005 levels by 2030.
The Utilities have taken, and continue to identify opportunities to take, direct action to reduce GHG emissions from their operations while focusing on reliability and managing cost impacts, including, but not limited to, supporting demand-side management programs that foster energy efficiency, using renewable resources for energy production and purchasing power from IPPs generated by renewable resources, and burning renewable biodiesel at selected Hawaiian Electric and Maui Electric generating units. 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 in Hawaiian Electric’s MD&A. 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.
Alternative business models . The Utilities are regulated operations engaged in the production, purchase, transmission, distribution and sale of electricity as a vertically integrated electric company. Any changes through the enactment of law to their current business model to alternative models, such as co-ops or a municipal, or to unbundle generation from transmission and distribution could potentially cause the Utilities to lose their competitive advantages and negatively impact the Utilities’ results of operations.
The foregoing legislation or legislation that now is, or may in the future be, proposed, such as potential carbon “cap and trade” legislation that, if applicable, may fundamentally alter costs to produce electricity and accelerate the move to renewable generation, present risks and uncertainties for the Utilities.
Renewable Transition Risk—The Utilities may be subject to increased operational challenges and their results of operations, financial condition and liquidity may be adversely impacted in meeting the commitments and objectives of clean energy initiatives, Renewable Portfolio Standards (RPS) and other climate-related goals . The far-reaching nature of the Utilities’ renewable energy commitments and the RPS and other climate related goals present risks to the Company. Among such risks are: (1) the potential delay by the Public Utilities Commission of the State of Hawaii (PUC) in considering (and potential disapproval of actual or proposed) renewable energy proposals and related costs; (2) the dependence on outside parties, such as the state, developers and third-party suppliers of renewable energy, which if the Utilities are unsuccessful in negotiating purchased power agreements with such IPPs or if a major IPP delays or fails to deliver the anticipated capacity and/or energy in its purchased power agreement, could impact the Utilities’ achievement of their commitments to RPS and other climate-related goals, eligibility for performance incentive mechanisms associated with the speed of increasing renewable generation, the ability to retire fossil fuel units, and/or the Utilities’ ability to deliver reliable service; (3) delays in acquiring or unavailability of non-fossil fuel supplies for renewable generation; (4) the impact of intermittent power to the electrical grid and reliability of service if appropriate supporting infrastructure is not installed or does not operate effectively; (5) the inability to recover the undepreciated cost of fossil fuel generating units if they are required to be retired before the end of their expected useful life; (6) uncertainties surrounding current and future renewable technologies, such as solar power, wind power, biofuels, battery storage, hydro, hydrogen, as well as related environmental assessments required to meet RPS and other climate-related goals; (7) uncertainty with regard to federal policy, including tax credit availability for both IPPs and Utility projects; (8) the impacts of implementation of the renewable energy proposals on future costs of electricity and potential penalties imposed by the PUC for delays in the commercial operations of renewable energy projects; (9) the likelihood that the Utilities may need to make substantial investments in related infrastructure, which could result in increased borrowings and, therefore, materially impact the financial condition and liquidity of the Utilities; (10) the imputed debt related to the executed renewable power purchase agreements could result in a credit rating downgrade for the Utilities and the Company; and (11) the commitment to support a variety of initiatives, which, if approved by the PUC, may have a material impact on the results of operations and financial condition of the Utilities depending on their design and implementation. These initiatives include, but are not limited
to, programs to enable more customer-sited generation. The implementation of these or other programs may adversely impact the results of operations, financial condition and liquidity of the Utilities.
ITEM 1B. UNRESOLVED STAFF COMMENTS
HEI: None.
Hawaiian Electric: Not applicable.
ITEM 1C. CYBERSECURITY
Cybersecurity risk oversight and management is a critical component of the Company’s overall enterprise risk management and top priority for the Company and its Board of Directors. The Company’s Board of Directors has delegated oversight of Enterprise Risk Management, which includes cybersecurity, to the HEI and Hawaiian Electric Audit and Risk Committees (collectively, the ARCs). The ARCs exercise their oversight responsibility of cybersecurity through quarterly (or more frequently if necessary) cybersecurity risk updates and reports of incidents, if any, by management (primarily the Utilities’ Chief Information Officer and Chief Information Security Officer (CISO)). In early 2023, in recognition of the heightened cybersecurity risks facing the Company, the ARCs formed the non-fiduciary Cybersecurity Working Group (CWG) to assist the ARCs with their oversight of such risks, including through: conducting periodic meetings with management to discuss cyber risk, risk treatment, and operational activities relative to cyber risk treatment; evaluating cybersecurity areas highlighted by the ARCs, including areas the CWG deems higher risk or topical; reporting to the ARCs on a quarterly basis, or more frequently as needed; and coordinating with the Company’s management on regular trainings and tabletop exercises for the Board of Directors. In early 2026, the ARCs broadened the oversight of the CWG to include physical security risk, given the potential interconnectedness of cybersecurity and physical security risks. The updated working group, now named the Cyber and Physical Security Working Group (CPWG), continues to perform the cybersecurity-related oversight described above with respect to the CWG in addition to added oversight relating to physical security risk.
Electric utility
System overview . The Utilities rely on evolving and increasingly complex operational systems and infrastructure and information systems, networks and other technologies, which are interconnected with the systems and network infrastructure owned by third parties, to support a variety of business processes and activities, including procurement and supply chain, invoicing and collection of payments, customer relationship management, human resource management, the acquisition, generation and delivery of electrical service to customers, and to process financial information and results of operations for internal and external reporting and compliance with regulatory, financial reporting, legal and tax requirements. The Utilities use their systems and infrastructure to create, collect, store, and process sensitive information, including personal information regarding customers, employees and their dependents, retirees, and other individuals.
Risk management and strategy . The Utilities have a cybersecurity program in place, which is integrated into the overall risk management program and includes a risk management strategy and risk assessment policy, which are disseminated and maintained by the CISO, revisited annually and govern the enterprise cybersecurity risk and maturity assessment process. The program is aligned with the National Institute of Standards and Technology (NIST) Cybersecurity Framework (CSF), and leverages a risk-based approach to optimize security investment and advance the security program’s maturity and security posture over time.
The Utilities’ cybersecurity program adopts security measures designed to protect the confidentiality, integrity, and availability of information technology systems, network infrastructure and other assets. The Utilities’ security measures, such as awareness and training, monitoring, etc. are designed to prevent, detect, and minimize the effects of a cybersecurity incident. These measures are periodically evaluated and audited against the NIST CSF by internal audit and independent third-party cybersecurity specialists.
The CISO actively monitors developments in the area of cybersecurity and is involved in various related government and industry groups and briefs the Company’s Board quarterly or as needed, including through the CPWG, on relevant cybersecurity issues. The Utilities continue to make investments in their cybersecurity program, including personnel, technologies, cyber insurance and training of Utilities personnel.
The Utilities have disaster recovery and incident response plans in place to protect their businesses from information technology service interruptions. The disaster recovery plans are established to help prevent the loss of customer data, service interruptions and disruptions to operations or damage to important facilities. In addition, the Utilities also maintain cyber liability insurance that covers certain damages caused by cyber incidents.
Despite the Utilities’ security measures, all of their systems are vulnerable to disability, failures or unauthorized access caused by natural disasters, physical attacks, cybersecurity incidents, security breaches, user error, unintentional defects created by system changes, military or terrorist actions, power or communication failures or similar events.
To date, the Utilities are not aware of any risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, that have materially affected or are reasonably likely to materially affect the Utilities, including their business strategy, results of operations or financial condition. For further information, see “The Company’s information technology and operations could be impacted by a cyber incident, cybersecurity breach, or physical attack that could materially and adversely affect its businesses and reputation” in Item 1A. Risk Factors.
Governance . Cybersecurity governance is a critically important part of managing security and risk, and helps ensure that the Utilities’ cybersecurity program aligns with its business objectives, complies with government and industry regulations, and achieves the goals that leadership has set out for managing security and risk.
The Company’s Board of Directors oversees risks from cybersecurity threats. Oversight includes quarterly or as needed reporting from the CISO on the overall cybersecurity risk reduction program maturity, emerging and current cybersecurity risks, and the cybersecurity threat landscape.
The CISO has over 30 years of experience in assessing and managing cyber risks, is responsible for day-to-day management of cybersecurity risks and regularly reports to the Board of Directors through the CPWG.
All Other segment
HEI does not have an information technology (IT) or cybersecurity risk management (CRM) department, including the resources or expertise, to manage IT/CRM-related matters and processes. HEI relies on Hawaiian Electric to provide most of its IT/CRM-related services pursuant to a Service Level Agreement (SLA), amended, as of November 30, 2023, between HEI and Hawaiian Electric. HEI also employs third party cybersecurity consultants as needed to assist in managing CRM-related matters. The SLA outlines specific services that Hawaiian Electric provides to HEI, which includes support on all IT/CRM-related matters, IT service desk support, electronic file storage and backup, hardware and software installation, inventory and maintenance, standard networking and telecommunication support, and other various IT/CRM matters, including periodic reporting to HEI’s Board of Directors and CPWG. Refer to Hawaiian Electric’s cybersecurity discussion for more information.
The SLA services provided by Hawaiian Electric are mainly for applications and systems on Hawaiian Electric’s infrastructure, networks and servers. The SLA does not cover support for certain software applications that were procured outside of Hawaiian Electric’s procurement and IT policies and procedures. These include HEI’s general ledger application itself, excluding the infrastructure that the general ledger application is installed on, and certain cloud-based software. Although these applications are not supported by Hawaiian Electric, security measures and internal control procedures related to user access and periodic security reviews have been implemented on these applications and are performed on an on-going basis in accordance with Hawaiian Electric’s IT policies and procedures. These controls are required to protect HEI’s financial and other sensitive information, as well as to prevent cybersecurity breaches on Hawaiian Electric’s infrastructure, networks and servers. In the event of a cybersecurity breach on these applications not supported by Hawaiian Electric, HEI employs third party cybersecurity consultants to assess and resolve issues resulting from a breach, depending on its severity. Hawaiian Electric may also provide guidance and support to assist HEI in assessing and resolving cybersecurity breaches. HEI has also formulated disaster recovery plans, which are updated on an annual basis, involving all of its critical applications.
HEI’s cybersecurity governance is primarily integrated within Hawaiian Electric’s cybersecurity governance plan and processes. HEI’s Board of Directors and CPWG are tasked with overseeing risks from cybersecurity threats through routine quarterly, or as needed, updates and periodic deep-dive sessions. These updates cover cybersecurity incidents, as well as overall cybersecurity risk reduction program maturity, emerging and current cybersecurity risks, and the cybersecurity threat landscape.
The HEI CFO oversees all IT and cybersecurity matters at HEI, including having oversight responsibility for the services delivered under the SLA. Since the HEI CFO does not have expertise in cybersecurity, the HEI CFO works with the Hawaiian Electric CISO and, if necessary, with third-party cybersecurity consultants on assessing, identifying, and managing material cybersecurity matters impacting HEI. There were no cybersecurity incidents that have materially affected or that we believe are reasonably likely to materially affect HEI, including its business strategy, results of operations or financial condition.
ITEM 2. PROPERTIES
HEI and Hawaiian Electric: See the “Properties” sections under “HEI” and “Electric utility” in Item 1. Business above.
ITEM 3. LEGAL PROCEEDINGS
HEI and Hawaiian Electric: HEI and Hawaiian Electric (including their direct and indirect subsidiaries) may be involved in ordinary routine PUC proceedings, environmental proceedings and/or litigation incidental to their respective businesses. See the descriptions of legal proceedings (including judicial proceedings and proceedings before the PUC and environmental and other administrative agencies) in “Item 1. Business,” in HEI’s MD&A and in the Notes 2 and 4 of the Consolidated Financial Statements. The outcomes of litigation and administrative proceedings are necessarily uncertain and there is a risk that the
outcome of such matters could have a material adverse effect on the financial position, results of operations or liquidity of HEI or one or more of its subsidiaries for a particular period in the future.
ITEM 4. MINE SAFETY DISCLOSURE
HEI and Hawaiian Electric: Not applicable.
INFORMATION ABOUT OUR EXECUTIVE OFFICERS (HEI)
The executive officers of HEI are listed below. Ms. Kimura is an officer of Hawaiian Electric, a subsidiary of HEI, but is deemed to be an executive officer of HEI under SEC Rule 3b-7 promulgated under the 1934 Exchange Act. HEI executive officers serve from the date of their initial appointment and are reappointed annually by the HEI Board or the Hawaiian Electric Board, as applicable, and thereafter are appointed for one-year terms or until their successors have been duly appointed and qualified or until their earlier resignation or removal. HEI executive officers may also hold offices with HEI subsidiaries and affiliates in addition to their current positions listed below.
Name
Age
Business experience for last 5 years and prior positions with the Company
Scott W. H. Seu
HEI President and Chief Executive Officer since 1/22
HEI Director since 1/22
ASB Director 1/22 to 12/24, Chair 1/22 to 8/23
ASB Hawaii Director since 1/22
· Hawaiian Electric President and Chief Executive Officer, 2/20 to 12/21
· Hawaiian Electric Director, 2/20 to 12/21
· Hawaiian Electric Senior Vice President, Public Affairs, 1/17 to 2/20
· Hawaiian Electric Vice President, System Operation, 5/14 to 12/16
· Hawaiian Electric Vice President, Energy Resources and Operations, 1/13 to 4/14
· Hawaiian Electric Vice President, Energy Resources, 8/10 to 12/12
· Hawaiian Electric Manager, Resource Acquisition Department, 3/09 to 8/10
· Hawaiian Electric Manager, Energy Projects Department, 5/04 to 3/09
· Hawaiian Electric Manager, Customer Installations Department, 1/03 to 5/04
· Hawaiian Electric Manager, Environmental Department, 4/98 to 12/02
· Hawaiian Electric Principal Environmental Scientist, 1/97 to 4/98
· Hawaiian Electric Senior Environmental Scientist, 5/96 to 12/96
· Hawaiian Electric Environmental Scientist, 8/93 to 5/96
Scott T. DeGhetto
HEI Executive Vice President & Chief Financial Officer, since 3/25
· HEI Executive Vice President, Chief Financial Officer and Treasurer 10/23 to 2/25
· Prior to joining the Company in October 2023: Moelis & Company, Managing Director, Power, Utilities & Renewable Energy, 2011-2023.
Kurt K. Murao
HEI Executive Vice President, General Counsel, Chief Administrative Officer and Corporate Secretary since 1/20
· HEI Vice President - Legal & Administration and Corporate Secretary, 10/16 to 12/19
· HEI Associate General Counsel, 3/11 to 10/16
Shelee M. T. Kimura
Hawaiian Electric President and Chief Executive Officer since 1/22
· Hawaiian Electric Senior Vice President, Customer Service and Public Affairs, 3/21 to 12/21
· Hawaiian Electric Senior Vice President, Customer Service, 2/19 to 3/21
· Hawaiian Electric Senior Vice President, Business Development & Strategic Planning, 1/17 to 2/19
· Hawaiian Electric Vice President, Corporate Planning & Business Development, 5/14 to 1/17
· HEI Director, Investor Relations, Strategic Planning & Budget, 11/09 to 5/14
· HEI Manager, Corporate Finance and Investments, 8/04 to 11/09
Family relationships; executive arrangements
There are no family relationships between any HEI executive officer and any other HEI executive officer or any HEI director or director nominee. There are no arrangements or understandings between any HEI executive officer and any other person pursuant to which such executive officer was selected.
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
HEI:
Certain of the information required by this item is disclosed in Note 15 of the Consolidated Financial Statements and “Equity compensation plan information” under “Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” of this Form 10-K.
HEI’s common stock is traded on the New York Stock Exchange under the ticker symbol “HE.” As of February 17, 2026, HEI had 2,663 registered shareholders (i.e., holders of record of HEI common stock), 17,477 DRIP participants and total record shareholders of 20,140. The HEI Board of Directors evaluates the dividend quarterly and considers many factors in the evaluation including, but not limited to, the Company’s results of operations, the long-term prospects for the Company, and the current and expected future economic conditions. 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 of 2023 dividend.
Purchases of HEI common shares were made on the open market during the fourth quarter to satisfy the requirements of certain plans as follows:
ISSUER PURCHASES OF EQUITY SECURITIES
Period*
Total Number
of Shares Purchased **
Average
Price Paid
per Share **
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs
October 1 to 31, 2025
November 1 to 30, 2025
December 1 to 31, 2025
Total
NA Not applicable.
* Trades (total number of shares purchased) are reflected in the month in which the order is placed.
** The purchases were made to satisfy the requirements of the HEI Dividend Reinvestment and Stock Purchase Plan (DRIP) and the Hawaiian Electric Industries Retirement Savings Plan (HEIRSP), for shares purchased for cash or by the reinvestment of dividends by participants under those plans and none of the purchases were made under publicly announced repurchase plans or programs. Average prices per share are calculated exclusive of any commissions payable to the brokers making the purchases for the DRIP and the HEIRSP. Of the “Total number of shares purchased,” 6,547 of the 16,006 shares, 4,952 of the 13,920 shares and 10,107 of the 22,278 shares were purchased for the DRIP; the remaining shares were purchased for the HEIRS. The repurchased shares were issued for the accounts of the participants under registration statements registering the shares issued under these plans.
Hawaiian Electric:
Since a corporate restructuring on July 1, 1983, all the common stock of Hawaiian Electric has been held solely by its parent, HEI. Although Hawaiian Electric’s common stock is registered under Section 12(g) of the Exchange Act, all such outstanding common stock is owned by HEI and there is no established public trading market for Hawaiian Electric’s common stock. Accordingly, information required with respect to “Market information” and “holders” is not applicable to Hawaiian Electric.
The dividends declared and paid to HEI on Hawaiian Electric’s common stock for the quarters of 2025 and 2024 were as follows:
Quarters ended
(in thousands)
March 31
June 30
September 30
December 31
Total
Also, see “Liquidity and capital resources” in HEI’s MD&A.
See the discussion of regulatory and other restrictions on dividends or other distributions in Note 15 of the Consolidated Financial Statements.
ITEM 6. [RESERVED]
HEI and Hawaiian Electric: Not applicable.
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.
HEI Consolidated
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.
(dollars in millions, except per share amounts)
% change
% change
Revenues
Operating income (loss)
Income (loss) from continuing operations for common stock
Income (loss) from discontinued operations 1
Net income (loss) for common stock
Net income (loss) by segment:
Electric utility
Other
Income (loss) from continuing operations for common stock
Continuing operations - Basic earnings (loss) per common share
Discontinued operations - Basic earnings (loss) per common share 1
Basic earnings (loss) per share
Continuing operations - Diluted earnings (loss) per common share
Discontinued operations - Diluted earnings (loss) per common share 1
Diluted earnings (loss) per share
Dividends per share
Weighted-average number of common shares outstanding (millions)
Dividend payout ratio
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:
Year ended December 31, 2025
(in thousands)
Electric utility
All Other segment
HEI Consolidated
Maui windstorm and wildfires related expenses:
Legal expenses
Outside services expense
Wildfire securities-related claims
Other expense
Interest expense
Total Maui windstorm and wildfires related expenses
Insurance recoveries 1
Deferral treatment approved by the PUC 2
Total Maui windstorm and wildfires related expenses, net of insurance recoveries and approved deferral treatment
Year ended December 31, 2024
(in thousands)
Electric utility
All Other segment
HEI Consolidated 5
Maui windstorm and wildfires related expenses:
Legal expenses
Outside services expense
Wildfire tort-related claims 3
Other expense 4
Interest expense
Total Maui windstorm and wildfires related expenses
Insurance recoveries
Deferral treatment approved by the PUC 2
Total Maui windstorm and wildfires related expenses, net of insurance recoveries and approved deferral treatment
Year ended December 31, 2023
(in thousands)
Electric utility
All Other segment
HEI Consolidated 5
Maui windstorm and wildfires related expenses:
Legal expenses
Outside services expense
Wildfire tort-related claims
Other expense
Interest expense
Total Maui windstorm and wildfires related expenses
Insurance recoveries
Deferral treatment approved by the PUC 2
Total Maui windstorm and wildfires related expenses, net of insurance recoveries and approved deferral treatment
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.
(in millions)
Change
Primary reason(s)
Revenue 1
Increase in other sales at Pacific Current subsidiaries.
Operating loss 1
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
Primarily due to lower average long-term debt balances (due to $384 million paydown in April 2025) in 2025 than in 2024.
Interest income
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
Sale of Pacific Current subsidiaries and impairment loss on Pacific Current assets sold and held for sale in the current year.
Income tax benefit
Lower pretax loss.
Net loss
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 HEI 1
Total available credit - Electric utility 2
All Other
Unsecured revolving line of credit
At-the-market program
Total credit and other liquidity- All Other
Total available credit and other liquidity - All Other
Consolidated cash and cash equivalents
Total available liquidity
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)
After five years
Total
Contractual obligations
Long-term debt 1
Interest on long-term debt 2
Maui Windstorm and Wildfire Settlement Agreements 3
Operating and finance leases
PPAs classified as leases
Other leases 4
Hawaiian Electric open purchase order obligations 5
Hawaiian Electric fuel oil purchase obligations (estimate based on fuel oil price at December 31)
Hawaiian Electric purchase power obligations–minimum fixed capacity charges not classified as leases
Liabilities for uncertain tax positions
Total (estimated)
1 Amounts 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.
2 Amounts 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.
3 As 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.
4 Amounts 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.
5 Includes 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
(dollars in millions)
Short-term borrowings, net
Long-term debt, net, including current portion of long-term debt, net
Preferred stock of subsidiaries
Common stock equity
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
From 1
From 1
From 1
Long-term issuer default, long-term and issuer credit, respectively
Short-term issuer default, commercial paper and commercial paper, respectively
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
Other benefits
Discount rate
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.
Electric utility
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
PUC-allowed returns
Difference
* 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 (s ee 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.
Increase (decrease)
(dollars in millions, except per barrel amounts)
Revenues. Net decrease largely due to:
lower fuel oil prices partially offset by higher kWh generated 1
lower purchased power energy prices, partially offset by higher kWh purchased and higher PPAC revenues 2
lower Major Project Interim Recovery (MPIR) revenue
higher Demand-Side Management revenue
higher revenue from ARA
Fuel oil expense 1 . Net decrease largely due to lower fuel oil prices and better heat rate performance, partially offset by higher kWh generated
Purchased power expense 1,2 . 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
Operation and maintenance expense . Net increase largely due to:
higher Maui windstorm legal and consulting costs primarily due to deferral of similar costs in 2024
higher incentive compensation programs
higher IT consulting and system maintenance expenses
higher property and general liability insurance costs
higher wildfire mitigation program related to vegetation management and inspections
higher pilot process and Demand Response cost
2024 accrual for settlement administration fees
deferral of Wildfire Safety Strategy costs in 2025
the settlement of indemnification claims asserted by the State of Hawaii in 2024 3
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
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
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
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
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
Return on average common equity
Average fuel oil cost per barrel
Kilowatt-hour sales (millions) 4
Number of full-time employees (at December 31)
1 The 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.
2 The 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.
3 Pursuant to an agreement to settle indemnification claims with the State of Hawaii. See Note 2 of the Consolidated Financial Statements.
4 kWh 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
Hawaiian Electric
Self-build
Maui Electric
Total
* 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
Fast Frequency Response - 2
Capacity -
Load Build
Capacity -
Load Reduction
Hawaiian Electric
Hawaii Electric Light
Maui Electric
Total
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
Hawaii Electric Light
Maui Electric
Self-build project
Hawaiian Electric
Total
• 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
ABL Facility
Borrowing from HEI - standing commitment letter
Total credit
Cash and cash equivalents
Total available liquidity from cash and under existing facilities
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
(dollars in millions)
Short-term borrowings, net
Long-term debt, net
Preferred stock
Common stock equity
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
From 1
From 1
From 1
Long-term issuer default, long-term and issuer credit, respectively
Short-term issuer default, commercial paper and commercial paper, respectively
Senior unsecured debt/special purpose revenue bonds
Cumulative preferred stock (selected series)
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
Less: taxable debt executed on September 18, 2025/ long-term intercompany loans
Remaining authorized amounts
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)
Change
Net cash provided by operating activities
Net cash used in investing activities
Net cash provided by (used in) financing activities
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 activiti es: 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.
