HAWAIIAN ELECTRIC INDUSTRIES INC Q1 FY2025 earnings call

Key Points

• Maui Wildfire Settlement Progress: The Hawaii State Supreme Court clarified subrogation issues, with remaining administrative steps for the settlement expected to be completed early 2026, leading to the first $479 million payment. The company contributed $75 million to the One 'Ohana initiative.
• Business Model Simplification: Sale of American Savings Bank and divestiture of Pacific Current assets are moving the company toward a focus on regulated utility operations.
• Utility Investments: Significant CapEx planned for the utilities' generation system and electric grid to enhance safety, reliability, and resilience.
• Wildfire Safety Measures: Enhanced wildfire safety measures outlined in the 2025-2027 wildfire safety strategy submitted to the PUC.
• PBR Rebasing: The PUC ordered rebasing of target revenues ahead of the second multiyear rate period, with an application expected to be filed later in 2025.
• Legislative Updates: Hawaii legislature passed bills related to the Maui wildfire settlement, liability cap, and securitization for wildfire mitigation CapEx.

In the first quarter, HEI reported net income of $26.7 million or $0.15 per share. Excluding certain items, consolidated core net income was $39.8 million or $0.23 per share. Utility core net income was $49.7 million compared to $44.2 million in the first quarter of 2024. Holding company core net loss was $9.9 million compared to $15.8 million in the first quarter of 2024. The utility dividend to HEI was reinstated with a $10 million quarterly dividend for the first quarter of 2025.

Forward-Looking Statements

• Settlement Payment: Remaining administrative steps for the Maui wildfire settlement are expected to be completed early 2026, with the first $479 million payment then.
• PBR Rebasing: Expect to file an application to rebase target revenues later in 2025.
• Securitization: SB 897 authorizes securitization for the first $500 million of utility CapEx related to wildfire mitigation.

Risks Identified

• Uncertainty in rating agency reactions to legislative actions like SB 897.
• Delays in the settlement approval process, including administrative steps and court approvals.
• Potential changes in PBR framework components (e.g., ROE, equity ratio) during the rebasing process.

Q: Do you anticipate positive feedback from rating agencies if SB 897 is signed into law?

A: Scott Seu says yes, indicating it's a credit positive once signed and other milestones achieved.

Q: How does SB 897 shift discussion towards future wildfire fund implementation?

A: Scott DeGhetto says SB 897 requires the PUC to study the viability of a wildfire fund and report to the legislature prior to the next session.

Q: Thoughts on securitization for wildfire mitigation CapEx?

A: Scott DeGhetto says SB 897 drafts that the first $500 million of utility CapEx for wildfire mitigation would use securitization.

Q: Planned rate case filing details?

A: Scott DeGhetto and Shelee Kimura mention a 2026 test year, with evaluation of ROE and equity ratio in the filing later in 2025.