UPDATE: Hawaiian Electric Industries Inc. just announced an ambitious plan to invest nearly $2 billion over the next three years, aimed at reducing wildfire risks and enhancing power generation across Hawaii. This significant financial commitment comes on the heels of the company’s third consecutive quarterly profit, marking a crucial shift in its operational strategy following the devastating Maui wildfire.
During a conference call with analysts on September 30, 2023, executives revealed plans to allocate between $1.75 billion and $2.35 billion from 2026 to 2028. This funding will stem from retained earnings and newly issued debt, representing an increase from $400 million this year to an anticipated annual spend of $550 million to $850 million.
The company’s decision follows its commitment to pay approximately $2 billion toward a $4 billion settlement related to the Maui wildfire, which tragically claimed 102 lives and destroyed around 5,500 homes. Scott Seu, HEI’s president and CEO, emphasized the need for these upgrades: “These investments are crucial for the safety and reliability of our services across the islands we serve.”
To finance these improvements, Hawaiian Electric secured a $600 million credit facility in September, increasing its previous limit of $375 million. Additionally, the company raised $500 million from institutional investors through debt issuance. These steps are designed to enhance liquidity and provide financial flexibility as the company embarks on this critical upgrade.
The financial recovery appears promising, with HEI reporting a profit of $31 million for the third quarter, a stark turnaround from a $104 million loss the previous year. This growth follows a pattern of profits in recent quarters, including $26 million in the second quarter and $27 million in the first.
Hawaiian Electric has also made significant strides in wildfire prevention. Since the beginning of 2024, the company has replaced or upgraded 3,628 wood poles and enhanced 36 miles of copper power lines with stronger aluminum alternatives. Furthermore, it has implemented a Public Safety Power Shutoff program, set to begin in July 2024, aimed at proactively reducing wildfire risks.
Seu stated, “These are just a few examples of the many advancements we’ve made to help ensure the safety of our communities.” HEI is also working with an in-house meteorologist and has installed 101 weather stations in areas prone to wildfires, alongside operating 135 A.I.-assisted video cameras for early fire detection.
As part of its commitment to wildfire victims, HEI has already contributed $75 million to a state fund and set aside $479 million for the first installment of the settlement, expected no earlier than early 2026. The company plans to fund its subsequent payments through a combination of debt and equity.
Hawaiian Electric’s stock has faced volatility, closing at $11.57 on the day of the earnings announcement, down from $37.36 before the Maui wildfire. The company continues to navigate the complex aftermath of the disaster, focusing on safety improvements while fulfilling its financial obligations.
Looking ahead, HEI’s wildfire safety strategy is currently under review by the state Public Utilities Commission, which could lead to increased rates for customers to support these critical investments. As Hawaiian Electric embarks on this transformative journey, they are poised to reshape the utility landscape in Hawaii, enhancing safety and reliability for all residents.
Stay tuned for further updates as this story develops.
