10-Q: Hawaiian Electric Posts Q3 Profit Amid Wildfire Settlements

Hawaiian Electric Industries reports a net income of $30.7 million for Q3 2025, a significant turnaround from a prior-year loss, driven by wildfire settlement progress and strategic divestitures.

Summary

• Hawaiian Electric Industries (HEI) consolidated net income for common stock was $30.7 million for the third quarter of 2025, a significant improvement from a net loss of $104.4 million in the same period of 2024.
• For the nine months ended September 30, 2025, HEI's consolidated net income for common stock was $83.5 million, compared to a net loss of $1.36 billion in the prior year, primarily due to the absence of large wildfire tort-related claims accruals.
• HEI and Hawaiian Electric have committed to contribute $1.99 billion to settle Maui wildfire tort-related legal claims, payable in four equal annual installments of approximately $479 million, with the first payment expected no sooner than early 2026.
• Binding term sheets were signed to settle the securities class action lawsuit for $47.8 million and shareholder derivative actions for $100 million, both fully funded by directors and officers liability insurance policies.
• Credit ratings for both HEI and Hawaiian Electric were upgraded by Fitch, Moody's, and S&P, reflecting improved financial stability and outlook.
• HEI and Hawaiian Electric increased their unsecured revolving credit facilities to $300 million each, and Hawaiian Electric successfully issued $500 million in unsecured senior notes.
• HEI is pursuing a strategy to divest all non-utility affiliated companies; American Savings Bank (ASB) was sold in December 2024, Pacific Current's solar and Battery Energy Storage System (BESS) facilities were sold in August 2025, and the Mahipapa biomass facility is classified as held for sale.
• The Utilities achieved a 35.8% Renewable Portfolio Standard (RPS) in 2024, exceeding the 34.0% target and earning a $1.9 million reward.
• Customer accounts receivable over 30 days past due decreased by 18% since December 2024, partly due to the receipt of government arrears.

Sentiment

Score: 7

Explanation: The company reported a significant turnaround to net income from a substantial loss in the prior year, primarily due to the absence of large wildfire accruals. Positive developments include credit rating upgrades, successful debt issuance, and progress on renewable energy projects. However, significant long-term liabilities from wildfire settlements, potential delays in decarbonization goals, and ongoing economic uncertainties in Hawaii temper the overall sentiment. The company is actively managing its financial position and strategic transition.

Positives

• HEI consolidated net income for common stock significantly improved to $30.7 million in Q3 2025 from a $104.4 million loss in Q3 2024, and to $83.5 million for 9M 2025 from a $1.36 billion loss in 9M 2024, primarily due to the absence of large wildfire tort-related claims accruals.
• Binding term sheets were signed for the Maui wildfire tort litigation settlement ($1.99 billion contribution from HEI/Hawaiian Electric) and related securities class action ($47.8 million) and shareholder derivative actions ($100 million), providing clarity on liabilities.
• Insurance proceeds are expected to fully fund the securities class action and derivative settlements, mitigating direct financial impact on the company.
• Credit rating upgrades from Fitch, Moody's, and S&P for both HEI and Hawaiian Electric indicate improved financial stability and outlook.
• Increased borrowing capacities for HEI and Hawaiian Electric's unsecured revolving credit facilities (to $300 million each) enhance liquidity.
• Hawaiian Electric successfully issued $500 million in unsecured senior notes, demonstrating renewed access to capital markets.
• Progress in renewable energy projects with Hale Kuawehi Solar (30 MW, 120-MWh BESS) and Hoohana Solar (52 MW, 208-MWh BESS) reaching commercial operations.
• The Utilities achieved a 35.8% RPS in 2024, exceeding the 34.0% target and accruing a $1.9 million reward.
• Customer accounts receivable over 30 days past due decreased by 18% since December 2024, partly due to government arrears, improving cash collection.
• The Public Utilities Commission (PUC) approved deferred accounting treatment for incremental non-labor expenses related to Maui wildfires through December 31, 2025, aiding cost management.
• Hawaii legislature passed Act 258 (wildfire relief fund, liability cap, securitization) and Act 301 (State appropriation for Maui wildfire settlement), which are expected to support the Utilities' financial stability and facilitate settlement resolution.
• Act 191 allows the State to step in for utilities in financial distress, ensuring project owners receive payment for new renewable energy and storage projects.

Negatives

• Significant ongoing liabilities related to the Maui windstorm and wildfires, with $1.99 billion committed for tort settlements, and $1.44 billion classified as a noncurrent liability.
• HEI's quarterly cash dividend remains suspended since Q2 2023, impacting shareholder returns.
• The 'All Other' segment (non-utility) continues to report net losses, although reduced from the prior year.
• Uncertainty regarding the ability to raise additional capital for the remaining wildfire tort claims, despite management's belief in success.
• Potential project delays and economic uncertainty due to President Trump's Executive Orders impacting Infrastructure Investment and Jobs Act (IIJA) and Inflation Reduction Act funding.
• Potential for higher prices for new renewable projects due to loss of federal tax credits and new tariffs on equipment from trade policies.
• Hawaii's economic outlook remains poor, with U.S. trade policy negatively impacting international visitor markets and the broader U.S. economy; a mild recession in Hawaii is forecasted with growing risk for a more significant economic downturn.
• System reliability disruptions are anticipated in the near term due to Interim Wildfire Safety Measures, including the Public Safety Power Shutoff (PSPS) program.
• Hawaii Island has two generators out of service for extended maintenance, risking generation shortfalls.
• The PUC dismissed HEI's initial request to terminate or suspend Affiliate Transaction Requirements (ATRs) without prejudice, requiring a revised request.
• The Molokai New Energy Partners (MNEP) lawsuit against Maui Electric for breach of contract has seen its trial continued to February 2026.
• Hu Honua Bioenergy, LLC litigation continues, with state claims dismissed without prejudice and the federal appeal briefing schedule vacated.
• The Utilities are unable to determine the ultimate outcome or the amount of any possible loss for the Endangered Species Act lawsuit regarding seabirds.
• The moratorium on disconnections on Maui continues through November 10, 2025, potentially leading to higher bad debt expense for the Utilities.
• The estimated cost for the Waiau Repower Project, a utility self-build project, increased from $847 million to $1.16 billion, citing unavoidable and changed market conditions.

Risks

• The potential for further trade policy changes under the current administration could disrupt supply chains and increase costs for capital goods and equipment, threatening project viability and the ability to meet renewable portfolio standards (RPS) goals.
• The impact of the Maui windstorm and wildfires, including potential liabilities from numerous lawsuits and regulatory penalties, may result in significant costs that are 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, which could alleviate future conditions causing substantial doubt about the 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 the ability to continue as a going concern prior to the issuance of annual financial statements, which could result in an event of default and debt acceleration, potentially leading to bankruptcy protection if waivers from lenders are not received.
• Extreme weather events, including windstorms and other natural disasters exacerbated by climate change, could increase the risk of equipment damage, inoperability, or contribution to wildfires.
• 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 HEI and Hawaiian Electric securities and their impact on financing efforts.
• The risks of suffering losses and incurring liabilities that are uninsured or underinsured, and 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 Hawaii's tourism, defense, and construction industries, real estate markets, federal government presence, government shutdowns, capital and credit market conditions, global developments, and pandemics.
• The ability to adequately address risks and capitalize on opportunities related to environmental, social, and governance (ESG) priority areas, including safety, reliability, resilience (wildfires), decarbonization, economic health and affordability, secure digitalization, human capital management, employee engagement, and climate-related risks and opportunities.
• Citizen activism, including civil unrest, which could negatively impact customers and employees, impair operations, and delay or preclude the completion of projects required to meet electricity demand, resilience, reliability, and RPS goals.
• The effects of actions or inaction of the U.S. government or related agencies, including those related to the U.S. debt ceiling, budget funding, monetary policy, trade policy, energy and environmental policy, and other policy and regulatory changes.
• Weather, natural disasters (e.g., hurricanes, earthquakes, tsunamis, lightning strikes, lava flows, and climate change effects), and wildfires, including their impact on the resilience, reliability, and cost of 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 to access credit and capital markets to fund necessary investments and expenditures under volatile and challenging market conditions, and the potential higher cost of such financings due to uncertainties associated with Maui wildfire costs.
• The risks inherent in changes in the value of pension and other retirement plan assets and 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.
• Potential delay by the PUC in considering (and potential disapproval of actual or proposed) wildfire safety, renewable energy, or resilience proposals, and related costs.
• Reliance by the Utilities on outside parties such as the State, independent power producers (IPPs), and developers; supply-chain challenges; and uncertainties surrounding technologies, solar power, wind power, biofuels, and environmental assessments required to meet RPS and other climate-related goals.
• The impacts of implementation of wildfire mitigation, renewable energy, and resilience proposals on future electricity costs and potential penalties imposed by the PUC for delays in commercial operations of renewable energy projects.
• The ability of the Utilities to develop, execute, and recover the implementation costs of their action plans included in their Integrated Grid Plan, due to recent PUC inclinations, Governor's Executive Order, and the Hawaii State Energy Office study.
• 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 fail or demand-side management, distributed generation, or other firm capacity resources fall short of forecasted benefits or are insufficient to meet peak demand.
• High and/or volatile fuel prices, which increase working capital requirements and customer bills, or delivery of adequate fuel by suppliers, which could affect the reliability of utility operations, and the continued availability of energy cost recovery clauses (ECRCs).
• The continued availability to the Utilities or modifications of other cost recovery mechanisms, including 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.
• The ability of the Utilities to recover increasing or additional costs 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 implementation of PBR, including potential new performance incentive mechanisms (PIMs), third-party proposals, and 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 customers' ability to pay utility bills and increase operating costs that cannot be recovered.
• The risks associated with increasing reliance on renewable energy, including the availability and cost of non-fossil fuel supplies and the operational and cost impacts of adding intermittent sources to the electric grid.
• The growing risk that energy production from renewable generating resources may be curtailed and interconnection of additional resources constrained as more generating resources are added and customers reduce 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 IPPs to make investments in their units to ensure availability.
• The ability of the Utilities to negotiate 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 energy storage and microgrids.
• Cybersecurity risks and the potential for cyber incidents at HEI, its subsidiaries, third-party service providers, contractors, and customers.
• Failure to achieve remaining cost savings commitment related to the management audit committed savings of $33 million over the 2021 to 2025 multi-year rate period (MRP).
• 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 taxation, capital requirements, regulatory policy, environmental laws, greenhouse gas emissions regulation, governmental fees, and potential carbon pricing).
• The impact from the PUC's implementation of wheeling for the Utilities, including cost shifting, customer equity considerations, potential increased competition, and other legal and technical implications.
• Developments in laws, regulations, and policies governing protections for historic, archaeological, and cultural sites, and plant and animal species and habitats, as well as their implementation and enforcement.
• Discovery of conditions that may be attributable to historical chemical releases, including any necessary investigation and remediation, and associated enforcement, litigation, or regulatory oversight.
• Decisions by the PUC in rate cases and other proceedings (including delays, adverse changes from interim decisions, and disallowance of project costs).
• 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).
• The risks associated with the geographic concentration of HEI's businesses.
• Changes in accounting principles applicable to HEI and its subsidiaries, including new U.S. accounting standards, potential discontinuance of regulatory accounting, 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 and the ability to effectively utilize federal and state net operating loss carryforwards.
• The ability of the company's non-regulated subsidiary, Pacific Current, LLC, to achieve its performance objectives, which in turn could affect its ability to service its non-recourse debt.
• The company's reliance on third parties and the risk of their non-performance.

Future Outlook

The company expects to meet its financial obligations and sustain operations in the short term with current liquidity, including funding the first installment of the wildfire tort claims settlement. However, long-term liquidity will be impacted by remaining wildfire liability payments, below investment-grade credit ratings, and higher working capital requirements due to inflation and elevated fuel prices. Management is actively working on a financing plan for the remaining wildfire tort claims but provides no assurance of success, noting that unsuccessful plans could lead to considering other strategic alternatives. The planned 70% reduction in carbon emissions is now expected to be achieved later than the original 2030 target due to project delays, supply chain disruptions, inflationary pressures, and federal policy changes, though the Utilities still expect to meet or exceed the State of Hawaii's RPS goals. Near-term system reliability disruptions are anticipated due to Interim Wildfire Safety Measures. The economic outlook for Hawaii remains poor, with a mild recession forecasted over the next year and growing risk for a more significant economic downturn.

Management Comments

• "Hawaiian Electric fully supports this humanitarian initiative [One Ohana Initiative] and has contributed $75 million."
• "Hawaiian Electric's commitment to contribute to the One Ohana Initiative is not an admission of guilt or reflection of fault or liability related to the wildfires."
• "The Company intends to vigorously defend itself in the litigation if a definitive settlement is ultimately not achieved."
• "The Company's objective continues to be to operate a strong, financially healthy enterprise to empower a thriving future for Hawaii."
• "Management believes with the Company's cash and cash equivalents amount of $548 million and GLST1's restricted cash amount of $479 million, both as of September 30, 2025, the available capacity on Hawaiian Electric's ABL Facility and HEI's and Hawaiian Electric's increased borrowing capacities of their unsecured lines of credit, 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..."
• "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 Utilities mission is to empower their communities and customers with safe, reliable, resilient, affordable, and clean energy."
• "The Utilities believe that a holistic approach to climate change is needed, working on both climate mitigation efforts along with climate adaptation efforts."
• "The Utilities remain committed to working with all stakeholders to reach Hawaii's ambitious renewable energy goals."
• "The Utilities are currently focused on taking immediate steps to keep island communities safe during extreme weather events."
• "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."
• "Management believes that HEI's and the Utilities' current cash and cash equivalents balances... provide sufficient liquidity to fund operations and satisfy their other obligations for the next 12 months..."
• "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."

Industry Context

Hawaiian Electric Industries operates in the U.S. utility sector, specifically in Hawaii, which has some of the nation's most ambitious renewable portfolio standards (100% by 2045). The company's strategic shift towards divesting non-utility assets aligns with a broader industry trend for utilities to focus on core regulated operations, particularly in the aftermath of significant events like the Maui wildfires. The ongoing transition to clean energy is a major industry driver, but HEI faces challenges common to the sector, such as federal policy changes (e.g., the 'One Big Beautiful Bill Act' impacting tax credits) and global supply chain disruptions, which can increase project costs and delay decarbonization goals. The emphasis on grid resilience and wildfire mitigation is a critical and growing trend for utilities operating in areas prone to natural disasters, necessitating substantial capital investments and operational adjustments like the Public Safety Power Shutoff (PSPS) program. The regulatory environment, particularly the Performance-Based Regulation (PBR) framework and the Public Utilities Commission (PUC), plays a crucial role in shaping cost recovery and incentivizing performance, a characteristic feature of regulated utilities.

Comparison to Industry Standards

• The company's Long-Term Incentive Plan (LTIP) performance goals include a market condition based on HEI's total shareholder return (TSR) compared to the EEI Index, which serves as a compensation peer group for industry comparison.
• Hawaii's Renewable Portfolio Standard (RPS) goals (30% by 2020, 40% by 2030, 70% by 2040, and 100% by 2045) are among the most aggressive in the U.S. The Utilities achieved a 35.8% RPS in 2024, exceeding the 2020 statutory goal.
• The Performance-Based Regulation (PBR) framework, with its Performance Incentive Mechanisms (PIMs) and Earnings Sharing Mechanism (ESM), represents a modern regulatory approach aimed at incentivizing utility performance, a growing trend in the utility industry.
• Hawaiian Electric's rate-making Return on Average Common Equity (ROACE) of 12.8% for the twelve months ended September 30, 2025, exceeded the PUC-allowed ROACE of 9.5%, indicating strong performance relative to its regulatory allowance, after adjustments for rate-making purposes.
• No specific comparable companies or projects are detailed for direct comparison of financial results or operational efficiency beyond the general reference to the EEI Index.

Corporate Governance

Legal Proceedings

• **Maui Windstorm and Wildfires Tort-Related Legal Claims**: Thousands of lawsuits are pending in Maui Circuit Court and federal court against HEI, the Utilities, and other defendants (including the County of Maui, State of Hawaii, private landowners, developers, and telecommunications companies). These lawsuits allege responsibility for, and/or negligence in failing to prevent or respond to, the wildfires, seeking damages for property destruction, loss of life, personal injury, wrongful death, emotional distress, and inverse condemnation.
• **One Ohana Initiative**: A humanitarian aid fund of $175 million, to which Hawaiian Electric contributed $75 million, aims to compensate victims in an expedited manner in exchange for waiving legal claims. Phase II claim submission reopened on October 23, 2025.
• **Global Settlement Agreements**: HEI and Hawaiian Electric entered into two definitive settlement agreements (Class Settlement Agreement and Individual Settlement Agreement) on November 1, 2024, to settle tort-related legal claims for a total contribution of $1.99 billion (out of approximately $4.04 billion total defendant contribution), without admission of liability. The first installment of approximately $479 million is expected no sooner than early 2026. The Class Settlement Agreement is subject to final court approval (hearing scheduled for January 8, 2026).
• **Subrogation Insurers' Claims**: The global settlement agreements do not resolve claims with insurers who have asserted subrogation claims. The Hawaii Supreme Court ruled on March 17, 2025, that insurers' exclusive remedy is to assert liens against policyholders' settlement amounts. Defendants moved for summary judgment on direct actions brought by insurers (hearing set for November 26, 2025). An appeal regarding the subrogation plaintiffs' motion to intervene in the state court class action was transferred to the Hawaii Supreme Court, with oral argument set for January 27, 2026.
• **Securities Class Action (Bhangal v. Hawaiian Electric Industries, Inc., et al.)**: A putative securities class action filed in the U.S. District Court for the Northern District of California alleges violations of the Securities Exchange Act of 1934 and Rule 10b-5. A binding term sheet was signed on November 5, 2025, to settle the action for $47.8 million, which will be fully funded by the company's directors and officers liability insurance policy.
• **Shareholder Derivative Actions**: Multiple putative shareholder derivative actions (including Rice v. Connors, et al., Hamilton v. Lau, et al., Kallaus v. Johns, et al., Cole v. Johns, et al., Tai v. Seu, et al., Assad v. Seu, et al., and Faris v. Seu, et al.) were filed in state and federal courts, alleging Hawaii state law and federal securities law claims against current and former officers and directors. A binding term sheet was signed on November 5, 2025, to settle all outstanding derivative actions for $100 million, which will be fully funded by the directors and officers liability insurance policies.
• **Hu Honua Bioenergy, LLC Litigation**: Ongoing litigation in the U.S. District Court for the District of Hawaii, previously involving breach of contract and antitrust claims. Federal antitrust claims were dismissed, and state claims were dismissed without prejudice. Hu Honua filed an appeal in the federal Ninth Circuit court and a new complaint in state court. Negotiations for a potential power purchase agreement are ongoing, and the briefing schedule for the appeal has been vacated.
• **Molokai New Energy Partners (MNEP) Litigation**: MNEP filed a complaint in the U.S. District Court for the District of Hawaii against Maui Electric claiming breach of contract. The trial was initially set for September 16, 2025, but was continued to commence on February 18, 2026.
• **Environmental Regulation Former Molokai Electric Company generation site**: Maui Electric has a reserve balance of $2.4 million as of September 30, 2025, for the probable and reasonably estimable undiscounted cost for remediation of environmental impacts (PCBs, residual fuel oils, other contaminants) at a former generation site and adjacent parcel.
• **Environmental Regulation Pearl Harbor sediment study**: Hawaiian Electric has a reserve account balance of $9.3 million as of September 30, 2025, to address PCB contamination in sediment offshore of the Waiau Power Plant as part of the Pearl Harbor Superfund Site.
• **Environmental Regulation Endangered Species Act**: The Utilities received a notice from Earthjustice alleging impacts on endangered seabirds from powerlines, street lights, and facility lights. A settlement agreement was approved for the powerlines aspect. A second complaint was filed on November 19, 2024, regarding the street and facility lights, with a trial set for April 20, 2026. An interim agreement was executed on July 3, 2025, regarding injunctive relief for 2025.

Related Party Transactions

• Hawaiian Electric Industries (HEI) is the sole holder of Hawaiian Electric Company, Inc. (Hawaiian Electric) common stock.
• Hawaiian Electric unconditionally guarantees Hawaii Electric Light Company, Inc.'s and Maui Electric Company, Limited's obligations to the State of Hawaii for Special Purpose Revenue Bonds and under their respective private placement note agreements.
• Hawaiian Electric is obligated, after satisfying its own preferred stock obligations, to make dividend, redemption, and liquidation payments on Hawaii Electric Light's and Maui Electric's preferred stock if the respective subsidiary is unable to make such payments.
• HEI has committed to make revolving short-term loans to Hawaiian Electric up to a limit of $75 million, though Hawaiian Electric currently has no borrowings under this commitment.
• As of September 30, 2025, Hawaii Electric Light had no short-term borrowings from Hawaiian Electric, while Maui Electric had $82.7 million in short-term borrowings from Hawaiian Electric; these intercompany borrowings are eliminated in consolidation.
• HEI transferred $479 million, representing the amount of the first wildfire settlement payment, into a new subsidiary, GLST1, LLC. Effective March 31, 2025, HEI assigned 60% of the membership interests of GLST1 to Hawaiian Electric, totaling $287.3 million, which is reported as 'Investment in unconsolidated affiliate' on the Utilities' Condensed Consolidated Balance Sheets.
• Sales from Hamakua Energy, LLC (previously an indirect subsidiary of Pacific Current, LLC) to Hawaii Electric Light (a regulated affiliate) were eliminated in consolidation up until the close of Hamakua Energy's sale on March 10, 2025.

Stakeholder Impact

• **Shareholders**: HEI's quarterly cash dividend remains suspended, impacting immediate returns. However, the resolution of major litigation and credit rating upgrades could provide long-term stability and value. Potential for dilution exists if HEI issues additional equity to fund remaining wildfire liabilities.
• **Customers**: The Utilities are committed to providing safe, reliable, resilient, affordable, and clean energy. Fuel cost recovery clauses and purchased power adjustment clauses pass through costs to customers. The Public Safety Power Shutoff (PSPS) program, while aimed at safety, will lead to service disruptions. The moratorium on disconnections on Maui helps customers impacted by the wildfires but may contribute to higher bad debt expense for the Utilities.
• **Employees**: A proposed corporate integration could move all HEI employees to the Utilities, potentially impacting organizational structure and roles.
• **Creditors**: Credit rating upgrades and successful debt issuance (e.g., Hawaiian Electric's $500 million senior notes) improve the company's standing and access to capital. The binding settlement agreements for wildfire liabilities provide greater clarity on financial commitments, reducing uncertainty for creditors.
• **Community (Maui)**: The One Ohana Initiative and the global settlement agreements aim to provide compensation and a path to recovery for victims of the Maui wildfires. The Wildfire Safety Strategy and Climate Adaptation Transmission and Distribution Resilience Program are designed to protect communities from future wildfire risks and enhance grid resilience.
• **Regulators (PUC)**: The company's actions and financial health are under close scrutiny by the PUC, particularly regarding wildfire cost recovery, rate re-basing, and the transition to renewable energy. Regulatory decisions significantly impact the company's operations and financial outcomes.

Next Steps

• HEI and Hawaiian Electric to prepare and execute definitive stipulation of settlement for the Securities Action.
• HEI and Hawaiian Electric to prepare and execute definitive settlement agreement for the Derivative Litigation Matters.
• Timely funding of the Securities Action Settlement Amount and Derivative Settlement Proceeds by insurers.
• Finalization of the Derivative Stipulation of Settlement by February 28, 2026.
• Preliminary and final court approval of the Securities Action Stipulation of Settlement.
• Entry of judgment of dismissal following final court approval of the Securities Action Stipulation of Settlement.
• Approval by the boards of HEI and Hawaiian Electric (including independent, non-defendant directors) of the Derivative Litigation Settlement Agreement.
• Final court approval of the Derivative Litigation Settlement Agreement.
• Entry of final judgment and orders of dismissal in the Derivative Litigation Matters.
• A hearing on final court approval of the Class Settlement Agreement is scheduled for January 8, 2026.
• Defendants moved for summary judgment on direct actions brought by insurers, with a hearing set for November 26, 2025.
• Subrogation plaintiffs' opening brief in the appeal is due November 21, 2025; answering briefs are due December 31, 2025; and the reply brief is due 14 days thereafter. Oral argument is set for January 27, 2026.
• The Utilities are to collaborate with parties on an alternative rate re-basing proposal for submission to the PUC by January 7, 2026.
• If the alternative rate re-basing proposal fails, the Utilities are to file a re-basing application in the second half of 2026 using a 2027 test year.
• The PUC may defer the start of MRP2 beyond January 2027 depending on the outcome of the rate re-basing proposals.
• Hawaiian Electric is required to develop a straw proposal for Track A of the wheeling docket on or before November 10, 2025.
• The PUC will issue a procedural order governing Track B of the wheeling docket.
• The Utilities plan to file another updated and supplemented PUC application for GMS Phase 2 updated project costs in Q4 2025.
• The Utilities are exploring other options for procuring renewable energy on Lanai after a project withdrawal.
• Negotiations for the remaining Stage 3 RFP projects are ongoing.
• The Utilities are requesting a decision from the PUC by March 13, 2026, for the Waiau Repower Project.
• The Utilities will continue to assess the impact of President Trump's Executive Orders on IIJA and Inflation Reduction Act funding.
• The Utilities will continue to monitor for any new Executive Orders and changes passed down through the federal contracting officer for the Resilience Program.
• The Utilities will continue the Habitat Conservation Plan (HCP) process and take specific actions to minimize and mitigate the potential impact of powerlines on endangered seabirds.
• The Utilities will engage in discovery and settlement discussions for the Endangered Species Act lawsuit regarding street and facility lights, with a trial set for April 20, 2026.
• The Utilities will continue returning to pre-pandemic collection policies, except on Maui where the moratorium on disconnections continues through November 10, 2025.
• HEI and Hawaiian Electric filed a revised request with the PUC to terminate or suspend the Affiliate Transaction Requirements (ATRs).

Key Dates

Recommendation

The company has made significant strides in addressing the financial fallout from the Maui wildfires, including reaching binding settlement agreements and securing insurance funding for certain liabilities. The recent credit rating upgrades and successful debt issuance demonstrate improved financial stability and access to capital. The strategic focus on divesting non-utility assets and advancing renewable energy projects aligns with long-term sustainability goals. However, substantial long-term liabilities from the wildfire settlements remain, requiring further capital raising efforts with no absolute assurance of success. The economic outlook for Hawaii is challenging, and federal policy changes introduce uncertainty for renewable energy projects. While the immediate crisis appears to be managed, significant risks and uncertainties persist, warranting a 'Hold' position as the company navigates these complex long-term challenges.

Keywords

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