POSTED: 1:30 a.m. HST, Nov 2, 2010
Hawaiian Electric Industries Inc. said its third-quarter profits edged lower as gains at its banking unit were offset by a drop in electricity sales at its utility subsidiary.
HEI reported net income of $32.4 million, or 35 cents a share, during the July-through-September period, down 3.3 percent from $33.5 million, or 37 cents, a share during the same quarter a year earlier.
The company said cooler and drier weather in the current quarter compared with a year earlier contributed to a 2.9 percent drop in electricity sales as customers reduced their use of air conditioning. However, even with the weather-related decline, electricity use had been trending lower due to the economic slowdown.
Sales of electricity were down 0.8 percent for the first nine months of the year compared with the same period a year earlier. And the company says it expects electricity sales to decline 1 percent for all of 2010.
Operations at HEI's utilities on Oahu, Maui, Molokai, Lanai and the Big Island generated $22 million in profit during the third quarter, down 17 percent from $26.5 million a year earlier.
Going forward, Hawaiian Electric Co. will focus less on electricity sales because of a new rate-setting mechanism that "decouples" the profit it earns from the amount of electricity it sells, said Constance Lau, HEI's president and chief executive officer. The decoupling mechanism is aimed at accelerating the adoption of clean-energy resources.
The company plans to implement decoupling at each of its utilities, starting with the Big Island's Hawaiian Electric Light Co. later this month, Lau said in a conference call with investors.
"At this point kilowatt-hour sales will no longer be an earnings driver," she said.
Earnings at HEI's American Savings Bank subsidiary rose 44.2 percent to $15.3 million from $11.3 million a year earlier. Lau attributed the gain to efforts to cut operating expenses and the liquidation of mortgage-backed securities that resulted in impairment charges in the year-ago quarter.
HEI shares closed down 56 cents, or 2.5 percent, at $22.54 on the New York Stock Exchange.