Detailed narrative
Wildfire Mitigation Plan (WMP) and Securitization
The PUC approved the utility's 3-year WMP in December and granted recovery of approximately $350 million ($270M capital, $80M O&M) through the EPRM. However, the company plans to request recovery via securitization, enabled by new legislation, to implement these investments at the least possible cost to customers. This approach is expected to be filed later this year, with EPRM used only for ineligible costs.
Rate Rebasing Request
HEI is in a transitional year, preparing for a rate reset in 2027. The PUC accepted their proposed rate rebasing methodology and a tentative schedule, allowing for a final decision in mid-to-late April 2027. The company resubmitted its request for a total $170 million base rate increase, phased over two years, with $125 million proposed to take effect January 1, 2027, pending an interim decision by December 18, 2026.
Integrated Grid Plan (IGP) and RFPs
The annual action plan update to the IGP prioritizes affordability and proposes competitive procurements for renewable generation. The company submitted a final IGP RFP to the PUC, seeking nearly 1,650 GWh of variable renewable energy, 465 MW of grid-forming resources, and 111 MW of firm generating capacity.
They also plan to launch an RFP for all fuels by year-end 2026 and requested to issue a new RFP for up to 500 MW of additional firm generation on Oahu, though the PUC requires a demonstration of need first.
Financial Performance and Maui Wildfire Settlement
Q2 FY26 net income was $123.2 million or $0.71 per share, significantly impacted by a noncash accounting adjustment to the Maui wildfire settlement liability. The remaining liability was adjusted down by $153.9 million (pretax $136.2 million net of accretion), reducing expenses as it became a contractual liability.
Excluding these and other noncore items, consolidated core net income was $22.5 million ($0.13 EPS), down from $35.4 million ($0.20 EPS) in Q2 FY25, primarily due to higher interest and O&M expenses.
Liquidity and Credit Ratings
Total consolidated liquidity stands at approximately $1.3 billion, including $52 million unrestricted cash at the holding company and $186 million at the utility, plus available credit facilities. The company maintains its financing plans for the remaining wildfire settlement payments, targeting investment-grade credit metrics.
S&P upgraded HEI and Hawaiian Electric one notch to BB- in July, following Moody's upgrade in April, citing progress in wildfire risk reduction and an improved business risk profile.
O&M and Cost Management
Higher O&M expenses are expected for the full year 2026, driven by increased vegetation management, generation overhauls, inspection costs, and elevated labor/benefit costs. The company is addressing these through the rate rebasing request, pursuing PBR framework changes in Phase 6 to align recovery with cost increases, and implementing internal efficiency measures such as insourcing work and optimizing processes.
They also anticipate a maximum penalty under the fuel cost risk-sharing mechanism and a loss from PIMs and SSMs for the year.
JERA's Proposal
JERA has publicly filed its intent with the PUC to submit an application in Q1 2027 to establish itself as a new regulated generation utility in Hawaii. While the governor supports JERA's plans, HEI's position is that any decision must be in the best interest of all customers, and the existing regulatory framework should be followed, with a focus on achieving the state's energy vision for affordability, reliability, and clean energy.