The parent of the electrical utility obligated to pay $2 billion for Maui wildfire loss claims earned a smaller first-quarter profit after selling assets, and says its finances are in better shape than at any point since the August 2023 disaster.
Hawaiian Electric Industries Inc. on Friday reported net income of $27 million for the January-March period, down from $42 million a year earlier.
The parent of Hawaiian Electric Co. said its reduced profit was largely the result of a $13 million pretax loss on the sale of a troubled Hawaii island power plant in March and the absence of profits from American Savings Bank that HEI sold Dec. 31 as part of an effort to pay for its share of a $4 billion wildfire litigation settlement over four years.
HEI said its “core” income for the first quarter was $40 million, compared with $28 million in the same period in 2024, which excludes $11 million in pretax wildfire-related expenses in the recent quarter and the loss from selling the power plant, Hamakua Energy.
Scott Seu, HEI president and CEO, told stock analysts on a conference call that the company has become more simplified without the former subsidiaries and is now in its strongest position since Hawaiian Electric power lines downed by extremely high winds sparked the disaster that killed 102 people and destroyed most of Lahaina.
“In summary, we believe our company’s investment thesis is stronger today than it has been at any point since the Maui wildfires,” he said.
Hawaiian Electric anticipates making the first of its four annual wildfire settlement payments after a state court judge gives final approval to the deal, which Seu said is expected in the first quarter of 2026.
The utility previously contributed $75 million to a state fund for some wildfire victims, and expects to pay its $1.92 billion balance in four equal annual installments of about $479 million.
To fund the first installment, HEI raised $558 million in September by selling new shares of stock.
HEI also sold its 90% stake in American Savings for $405 million, but conditions tied to HEI debt required that proceeds be used to reduce debt, which the company said it did to the tune of $384 million in April.
Having less debt should allow HEI to more easily issue new debt to pay for its next wildfire damage payment installment. The company also has said part of the next installment is expected to be raised by selling more new HEI stock.
“We’re well positioned to finance the remaining settlement payments,” Seu said.
As part of describing its financial condition Friday, HEI reported that on top of the $479 million held for the first wildfire settlement payment, the company had $492 million in cash for unrestricted use at the end of the first quarter, including the $384 million subsequently used to repay debt. Separately, Hawaiian Electric had $130 million in cash for unrestricted use.
HEI’s first-quarter profit followed a $68 million loss in the fourth quarter of 2024 that compared with a $49 million profit in the fourth quarter of 2023.
For all of 2024, HEI recorded a $1.43 billion loss, which mainly represented the company’s whole Maui wildfire settlement obligation. In 2023, HEI earned a $199 million profit.
Looking ahead, HEI expects financial benefits will flow from a bill recently passed by the state Legislature if it becomes law and is implemented.
Senate Bill 897 directs the state Public Utilities Commission to determine a monetary liability limit for any future catastrophic wildfire damage caused by an electrical utility that has an approved wildfire mitigation plan. This cap could be a fixed amount per event, or a total that covers a period of time regardless of the number of wildfire disasters.
The bill awaits potential enactment by Gov. Josh Green. If SB 897 becomes law, the PUC would conduct a quasi-judicial proceeding that allows public input to produce such a liability cap, which Seu said is something that exists or is being considered in other states.
SB 897 also would allow an electrical utility to pledge ratepayer revenue for repayment of bonds that finance up to $500 million in capital improvements that reduce wildfire risk.
This mechanism, referred to as securitization, should allow Hawaiian Electric to borrow money for such improvements at a lower cost than traditional financing, and therefore result in a lower cost that gets passed on to ratepayers.
Seu said a lot of work lies ahead to implement the legislation if enacted but that it is expected to be part of HEI emerging from the wake of the Maui disaster as a stronger and more resilient company.
“With resolution of the wildfire tort litigation expected over the next year, our simpler business model focused solely on regulated operations, our strong and improving safety profile, and earnings improvement opportunities on the horizon, we’re very optimistic about our future,” he said.
Shares of HEI stock closed Friday at $10.49 before the earnings announcement. Shares over the past 52 weeks have closed as high as $17.51 on July 19 and as low as $7.74 on July 9. The day before the wildfire, HEI shares were at $37.36.
