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Wildfire Mitigation Plan (WMP) Regulatory and Cost Update

• PUC approved HEI's 3-year WMP in December 2025, confirming the strategy reduces wildfire risk, and approved $350 million in WMP spending recovery via the Exceptional Project Recovery Mechanism (EPRM) in June 2026, consisting of $270 million in capital and $80 million in O&M costs.
• HEI plans to request WMP cost recovery via Act 258 securitization (rather than EPRM) to minimize customer costs, with an application for a PUC financing order currently in preparation; EPRM will only be used for costs ineligible for securitization.

Rate Rebasing Progress

• HEI submitted a 2027 rate reset request in March 2026, which was accepted by the PUC, and resubmitted the request in a new docket in July 2026 with continued stakeholder support.
• The total proposed base rate increase is $170 million, phased in over two years, with $125 million scheduled to take effect in January 2027; HEI has requested an interim PUC decision by December 18, 2026, with a final PUC decision expected in mid-to-late April 2027.

Integrated Grid Plan (IGP) and Clean Energy Procurement

• HEI filed its annual IGP action plan update in June 2026, prioritizing customer rate stability, affordability, energy equity, and decarbonization through competitive renewable energy procurement.
• A landmark IGP generation RFP (one of the largest in Hawaii state history) was submitted to the PUC in July 2026, seeking 1,650 GWh of variable renewable energy, 465 MW of grid-forming resources, and 111 MW of firm generation capacity.
• HEI also requested PUC approval to launch an additional RFP for up to 500 MW of new firm generation on Oahu; the PUC has requested a full system reliability and capacity need demonstration before approval, which HEI called reasonable and plans to provide.
• Three solar-plus-storage PPAs from the 2023 Stage 3 RFP (totaling 166 MW of solar and 670 MWh of battery storage) have been approved by the PUC, with seven additional projects pending regulatory review; HEI targets 1.2 GW of private rooftop solar by 2030.

Grid Resilience Investments

• HEI has planned over $1.3 billion in grid interconnection investments through 2035, $60 million in distribution upgrades over the next 10 years, and $190 million over five years for its PUC-approved Climate Adaptation Program to harden the grid against severe weather.

Financial and Credit Update

• As of Q2 end 2026, total consolidated liquidity is approximately $1.3 billion, with sufficient capacity to cover higher working capital needs from sustained high fuel prices; bad debt expense is lower than year-ago levels, with net write-offs flat.
• Both S&P (July 2026) and Moody's (April 2026) upgraded HEI and its utility subsidiary one notch, with S&P upgrading HEI/ Hawaiian Electric to BB- and revising the business risk profile to "satisfactory" from "fair", citing WMP implementation progress and PUC support.

• HEI's 3-year capital expenditure outlook through 2028 remains largely unchanged from prior guidance, with updated ranges after final WMP approval for separate cost recovery.
• Full-year 2026 O&M expense is expected to be materially higher than prior years, driven by the end of deferred wildfire insurance cost treatment, first quarter 2026 severe storm response costs, increased vegetation management spending, higher generation overhaul and maintenance costs, elevated cybersecurity IT costs, and inflation-driven higher labor and benefit costs. Securitized WMP capital expenditure will not be included in rate base if approved.
• HEI expects to incur the maximum penalty under its fuel cost risk sharing mechanism (FCRS) in 2026, and does not expect to match the 2025 PIM and shared saving mechanism rewards (which totaled $7.5 million in 2025); HEI currently expects to accrue a loss from these incentive mechanisms for full-year 2026.
• Full-year 2026 interest expense will be higher due to the September 2025 high yield debt issuance, lost interest income on settlement cash after the April 2026 settlement payment, and non-cash interest accretion from the Maui wildfire settlement liability re-measurement that will continue through all remaining settlement payments.

For Q2 2026, HEI reported consolidated GAAP net income of 123.2 million yen (71 cents per share), which included a 153.9 million yen pre-tax net benefit from a downward re-measurement of the Maui wildfire settlement liability and 8.5 million yen in related insurance recoveries. Excluding non-core Maui wildfire settlement impacts and Pacific current asset sale losses, consolidated core net income was 22.5 million yen (13 cents per share), down from 35.4 million yen (20 cents per share) in Q2 2025. The Utility segment reported core income of 32.6 million yen, a decrease from 42.5 million yen in the year-ago quarter, representing 100% of HEI's core operating income as the holding company recorded a core net loss. The holding company segment recorded a core net loss of 10.1 million yen, wider than the 7.1 million yen loss in Q2 2025, driven by lower interest income from reduced cash balances after the first Maui wildfire settlement payment.

• HEI faces structural cost headwinds from significantly higher wildfire insurance premiums post-Maui wildfire, inflation-driven labor and supply chain cost increases that outpace current annual automatic rate adjustment provisions, and higher interest costs from recent debt issuance.
• The PUC has not yet approved HEI's proposed securitization for WMP cost recovery, and approval is not guaranteed; some WMP costs may be forced to recover via the more expensive EPRM mechanism, raising costs for customers and impacting earnings.
• The rate rebasing approval timeline and final approved increase size are subject to PUC regulatory review, and the requested interim 2027 rate increase is not guaranteed to be approved by the requested December 2026 deadline.
• Proposed third-party entry into Hawaii's regulated generation market introduces uncertainty about the existing regulatory and operating framework, though the formal application process has not yet begun.
• HEI remains exposed to wildfire and severe weather risk, even after mitigation investments, and is still working through the process of completing all Maui wildfire settlement payments.

Q: Does the full $350 million in WMP capital eligible for securitization count toward HEI's 2028 capital plan, and how should rate-based capital growth be adjusted for this amount? / A: All WMP costs recovered via securitization will not be included in rate base, so the full $350 million should be excluded from the 2028 rate-based capital plan. HEI expects to receive PUC approval for securitization eligibility and will file the formal application later in 2026.

Q: When will HEI be eligible to file its next rate case after the current 2027 rebasing, and could it file earlier than the end of the next multi-year plan? / A: The current 2027 rebasing sets rates for a new five-year multi-year rate plan, so the next rate rebasing process is expected to occur around 2032, aligned with the end of the five-year term.

Q: What is driving the expected materially higher O&M expenses, and can HEI provide more detail on the size and persistence of these increases? / A: O&M increases are split into three buckets: episodic, one-time costs (like storm response that will not repeat at the same level), deliberate pre-recovery spending on safety and reliability, and structural increases (most notably higher wildfire insurance premiums). HEI is addressing these costs via the current rate rebasing request, regulatory changes in the upcoming PBR Phase 6 proceeding to align cost recovery with actual inflation, and internal efficiency initiatives including insourcing work and streamlining processes. HEI has already seen lower per-unit insurance rates as it demonstrates wildfire risk reduction, even as it increases total coverage to lower overall risk.

Q: What is HEI's position on JIRA's proposal to create a new regulated generation utility in Hawaii, given reported public support from the governor? / A: JIRA has only submitted an exploratory letter, and has not yet filed a formal application to kick off the PUC review process. HEI states any outcome must prioritize the best interests of Hawaii customers, supports following the existing long-standing regulatory framework, and will fully participate in the formal PUC process if it is launched. HEI notes it shares the governor's stated goals of improving affordability, reliability, and clean energy development, so disagreement is on process rather than end objectives.