Electric utility segment

3 Months Ended

Mar. 31, 2019

Electric utility subsidiary [Abstract]

Electric utility segment

Electric utility segmentHECO Capital Trust III. Trust III, a statutory trust, which was formed to effect the issuance of $50 million of cumulative quarterly income preferred securities in 2004 (2004 Trust Preferred Securities), has at all times been a wholly-owned unconsolidated subsidiary of Hawaiian Electric. Trust III’s balance sheets as of March 31, 2019 and December 31, 2018 each consisted of $51.5 million of 2004 Debentures; $50 million of 2004 Trust Preferred Securities; and $1.5 million of trust common securities. Trust III’s income statements for the three months ended March 31, 2019 and 2018 consisted of $0.8 million of interest income received from the 2004 Debentures; $0.8 million of distributions to holders of the Trust Preferred Securities; and $25,000 of common dividends on the trust common securities to Hawaiian Electric. On April 12, 2019, Trust III issued a conditional notice of redemption to the holders of the Trust’s outstanding 6.50% Series 2004 Trust Preferred Securities, indicating that it will be redeemed in whole on May 15, 2019.Unconsolidated variable interest entities.

Power purchase agreements.  As of March 31, 2019, the Utilities had four PPAs for firm capacity (excluding the PGV PPA as PGV has been offline since May 2018 due to lava flow on Hawaii Island) and other PPAs with independent power producers (IPPs) and Schedule Q providers (i.e., customers with cogeneration and/or power production facilities who buy power from or sell power to the Utilities), none of which is currently required to be consolidated as VIEs.

Pursuant to the current accounting standards for VIEs, the Utilities are deemed to have a variable interest in Kalaeloa Partners, L.P. (Kalaeloa), AES Hawaii, Inc. (AES Hawaii) and Hamakua Energy by reason of the provisions of the PPA that the Utilities have with the three IPPs. However, management has concluded that the Utilities are not the primary beneficiary of Kalaeloa, AES Hawaii and Hamakua Energy because the Utilities do not have the power to direct the activities that most significantly impact the three IPPs’ economic performance nor the obligation to absorb their expected losses, if any, that could potentially be significant to the IPPs. Thus, the Utilities have not consolidated Kalaeloa, AES Hawaii and Hamakua Energy in its condensed consolidated financial statements. Hamakua Energy is an indirect subsidiary of Pacific Current and is consolidated in HEI’s condensed consolidated financial statements.

For the other PPAs with IPPs, the Utilities have concluded that the consolidation of the IPPs was not required because either the Utilities do not have variable interests in the IPPs due to the absence of an obligation in the PPAs for the Utilities to absorb any variability of the IPPs, or the IPP was considered a “governmental organization,” and thus excluded from the scope of accounting standards for VIEs. Two IPPs of as-available energy declined to provide the information necessary for Utilities to determine the applicability of accounting standards for VIEs. If information is ultimately received from the IPPs, a possible outcome of future analyses of such information is the consolidation of one or both of such IPPs in the unaudited condensed consolidated financial statements. The consolidation of any significant IPP could have a material effect on the unaudited condensed consolidated financial statements, including the recognition of a significant amount of assets and liabilities and, if such a consolidated IPP were operating at a loss and had insufficient equity, the potential recognition of such losses. If the Utilities determine they are required to consolidate the financial statements of such an IPP and the consolidation has a material effect, the Utilities would retrospectively apply accounting standards for VIEs to the IPP.Commitments and contingencies.

Fuel Contracts. The fuel contract entered into in January 2019, by the Utilities and PAR Hawaii Refining, LLC, for the Utilities' low sulfur fuel oil, high sulfur fuel oil, No. 2 diesel, and ultra-low sulfur diesel requirements was approved by the PUC, and became effective on April 28, 2019. The existing fuel contracts with Island Energy Services, LLC (IES), terminated on April 27, 2019, as agreed with IES under a mutual termination and release agreement entered into in November 2018.

Contingencies. The Utilities are subject in the normal course of business to pending and threatened legal proceedings. Management does not anticipate that the aggregate ultimate liability arising out of these pending or threatened legal proceedings will be material to its financial position. However, the Utilities cannot rule out the possibility that such outcomes could have a material effect on the results of operations or liquidity for a particular reporting period in the future.

Interim rate increases. As of March 31, 2019, the Utilities recognized $17 million of revenues with respect to the Maui Electric 2018 rate case interim order. On March 18, 2019, the PUC issued a final order which resulted in a refund of approximately $0.5 million proposed to be returned to customers, starting June 2019.

Power purchase agreements.  Purchases from all IPPs were as follows:

	Three months ended March 31
(in millions)	2019		2018
Kalaeloa	$	40	$	40
AES Hawaii	32		37
HPOWER	18		15
Puna Geothermal Venture	—		11
Hamakua Energy	16		7
Wind IPPs	20		22
Solar IPPs	7		6
Other IPPs 1	1		2
Total IPPs	$	134	$	140

¹  Includes hydro power and other PPAs

Kalaeloa Partners, L.P.  Under a 1988 PPA, as amended, Hawaiian Electric is committed to purchase 208 MW of firm capacity from Kalaeloa. Hawaiian Electric and Kalaeloa are currently in negotiations to address the PPA term that ended on May 23, 2016. The PPA automatically extends on a month-to-month basis as long as the parties are still negotiating in good faith. Hawaiian Electric and Kalaeloa have agreed that neither party will terminate the PPA (which has been subject to automatic extension on a month-to-month basis) prior to October 31, 2019, to allow for a negotiated resolution and PUC approval.

AES Hawaii, Inc. Under a PPA entered into in March 1988, as amended (through Amendment No. 2) for a period of 30 years ending September 2022, Hawaiian Electric agreed to purchase 180 MW of firm capacity from AES Hawaii. Hawaiian Electric and AES Hawaii have been in dispute over an additional 9 MW of capacity. In February 2018, Hawaiian Electric reached agreement with AES Hawaii on an amendment to the PPA. However, in June 2018, the PUC issued an order suspending review of the amendment pending a DOH decision on AES’ request for approval of its Emission Reduction Plan and partnership with Hawaiian Electric. If approved by the PUC, the amendment will resolve AES Hawaii’s claims related to the additional capacity.

Hu Honua Bioenergy, LLC (Hu Honua). In May 2012, Hawaii Electric Light signed a PPA, which the PUC approved in December 2013, with Hu Honua for 21.5 MW of renewable, dispatchable firm capacity fueled by locally grown biomass from a facility on the island of Hawaii. Under the terms of the PPA, the Hu Honua plant was scheduled to be in service in 2016. However, Hu Honua encountered construction and litigation delays, which resulted in an amended and restated PPA between Hawaii Electric Light and Hu Honua dated May 5, 2017. In July 2017, the PUC approved the amended and restated PPA, which becomes effective once the PUC’s order is final and non-appealable. In August 2017, the PUC’s approval was appealed by a third party. The appeal is still pending. Hu Honua expects to complete construction of the plant by the end of September 2019, and begin commissioning activities in the fourth quarter of 2019.

Utility projects.  Many public utility projects require PUC approval and various permits from other governmental agencies. Difficulties in obtaining, or the inability to obtain, the necessary approvals or permits can result in significantly increased project costs or even cancellation of projects. In the event a project does not proceed, or if it becomes probable the PUC will disallow cost recovery for all or part of a project, or if PUC-imposed caps on project costs are expected to be exceeded, project costs may need to be written off in amounts that could result in significant reductions in Hawaiian Electric’s consolidated net income.

Enterprise Resource Planning/Enterprise Asset Management (ERP/EAM) implementation project. On August 11, 2016, the PUC approved the Utilities’ request to commence the ERP/EAM implementation project, subject to certain conditions, including a cap on cost recovery as well as a requirement that the Utilities achieve future cost savings consistent with a minimum of $244 million in ERP/EAM project-related benefits to be delivered to customers over the system’s 12-year service life.

The ERP/EAM Implementation Project went live in October 2018. In the Hawaiian Electric 2017 rate case, a settlement agreement approved by the PUC included authorization for the deferred project costs to accrue a return at 1.75% after the project went into service and until the deferred project costs are included in rate base, and for amortization of the deferred costs to not begin until the amortization expense is incorporated in rates and the unamortized deferred project costs are included in rate base. As of March 31, 2019, the total deferred project costs and accrued carrying costs after the project went into service amounted to $58.7 million.

In February 2019, the PUC approved a methodology for passing the benefits of the new ERP/EAM system to customers developed by the Utilities in collaboration with the Consumer Advocate. The minimum of $244 million in customer benefits to be delivered over the 12-year service life is comprised of $141 million in future net O&M expense reductions and cost avoidance, and $103 million in future cost avoidance related to capital cost and tax cost. The Utilities are required to file their Benefits Clarification filing by June 3, 2019.

West Loch PV Project. In June 2017, the PUC approved the expenditure of funds for Hawaiian Electric to build, own and operate a utility-owned, grid-tied 20-MW (ac) solar facility on property owned by the Department of the Navy, including a proposed project cost cap of $67 million and a performance guarantee to provide energy at 9.56 cents/kWh or less to the system.

In approving the project, the PUC agreed that the project is eligible for recovery of costs offset by related net benefits under the newly-established major project interim recovery (MPIR) adjustment mechanism. (See “Decoupling” section below for MPIR guidelines and cost recovery discussion.) Hawaiian Electric has provided supplemental materials, as requested by the PUC, to support meeting the MPIR guidelines, accompanied by system performance guarantee and cost savings sharing mechanisms. A decision on these matters is pending.

Hawaiian Electric executed a fixed-price Engineering, Procurement, and Construction (EPC) contract for the project on December 6, 2017. The EPC contract includes the cost of the solar panels for the project, which is not subject to modification due to any tariffs that may be imposed under the current photovoltaic (PV) cell and module import tariffs. Construction of the facility began in the second quarter of 2018, and the facility is expected to be placed in service in the third quarter of 2019. Project costs incurred as of March 31, 2019 amounted to $44.2 million.

Environmental regulation.  The Utilities are subject to environmental laws and regulations that regulate the operation of existing facilities, the construction and operation of new facilities and the proper cleanup and disposal of hazardous waste and toxic substances.

Hawaiian Electric, Hawaii Electric Light and Maui Electric, like other utilities, periodically encounter petroleum or other chemical releases associated with current or previous operations. The Utilities report and take action on these releases when and as required by applicable law and regulations. The Utilities believe the costs of responding to such releases identified to date will not have a material effect, individually or in the aggregate, on Hawaiian Electric’s consolidated results of operations, financial condition or liquidity.

Former Molokai Electric Company generation site.  In 1989, Maui Electric acquired by merger Molokai Electric Company. Molokai Electric Company had sold its former generation site (Site) in 1983, but continued to operate at the Site under a lease until 1985. The Environmental Protection Agency (EPA) has since identified environmental impacts in the subsurface soil at the Site. In cooperation with the Hawaii Department of Health and EPA, Maui Electric further investigated the Site and the Adjacent Parcel to determine the extent of impacts of polychlorinated biphenyls (PCBs), residual fuel oils and other subsurface contaminants. Maui Electric has a reserve balance of $2.7 million as of March 31, 2019, representing the probable and reasonably estimable cost for remediation of the Site and the Adjacent Parcel; however, final costs of remediation will depend on cleanup approach implemented.

Pearl Harbor sediment study. In July 2014, the U.S. Navy notified Hawaiian Electric of the Navy’s determination that Hawaiian Electric is a Potentially Responsible Party responsible for the costs of investigation and cleanup of PCB contamination in sediment in the area offshore of the Waiau Power Plant as part of the Pearl Harbor Superfund Site. Hawaiian Electric was also required to assess potential sources and extent of PCB contamination onshore at Waiau Power Plant.

As of March 31, 2019, the reserve account balance recorded by Hawaiian Electric to address the PCB contamination was $4.7 million. The reserve balance represents the probable and reasonably estimable cost for the onshore investigation and the remediation of PCB contamination in the offshore sediment. The final remediation costs will depend on the assessment of potential source control requirements for onshore sediment and actual offshore cleanup costs.

Regulatory proceedings

Decoupling. Decoupling is a regulatory model that is intended to provide the Utilities with financial stability and facilitate meeting the State of Hawaii’s goals to transition to a clean energy economy and achieve an aggressive renewable portfolio standard. The decoupling mechanism has the following major components: (1) monthly revenue balancing account (RBA) revenues or refunds for the difference between PUC-approved target revenues and recorded adjusted revenues, which delinks revenues from kilowatthour sales, (2) RAM revenues for escalation in certain O&M expenses and rate base changes, (3) MPIR component, (4) performance incentive mechanisms (PIMs), and (5) an earnings sharing mechanism, which would provide for a reduction of revenues between rate cases in the event the utility exceeds the return on average common equity

(ROACE) allowed in its most recent rate case. Under the decoupling mechanism, triennial general rate cases are required. On March 29, 2019, the Utilities filed the 2019 annual filing which is subject to PUC review.

Rate adjustment mechanism. The RAM is based on the lesser of: a) an inflationary adjustment for certain O&M expenses and return on investment for certain rate base changes, or b) cumulative annual compounded increase in Gross Domestic Product Price Index applied to annualized target revenues (the RAM Cap). Annualized target revenues reset upon the issuance of an interim or final decision and order (D&O) in a rate case.

The RAM Cap impacted the Utilities' recovery of capital investments as follows:

• Hawaiian Electric's RAM revenues were limited to the RAM Cap in 2018.

• Maui Electric's RAM revenues were below the RAM Cap in 2018.

• Hawaii Electric Light’s RAM revenues were limited to the RAM Cap in 2018.

Major project interim recovery. On April 27, 2017, the PUC issued an order that provided guidelines for interim recovery of revenues to support major projects placed in service between general rate cases.

The PUC approved recovery of capital costs under the MPIR for Schofield Generating Station, which increased revenues in 2018 by $3.6 million and will be collected in customer bills beginning in June 2019. In February 2019, Hawaiian Electric submitted an MPIR filing of $19.8 million for 2019 (which accrued effective January 1, 2019) that included the 2019 return on project amount (up to the capped amount) in rate base, depreciation and incremental O&M expenses, for collection from June 2020 through May 2021.

Performance incentive mechanisms. The PUC has ordered the following PIMs.

• Service Quality performance incentives are measured on a calendar-year basis. The PIM tariff requires the performance targets, deadbands and the amount of maximum financial incentives used to determine the PIM financial incentive levels for each of the PIMs to be re-determined upon issuance of an interim or final order in a general rate case for each utility.

• Service Reliability Performance measured by System Average Interruption Duration and Frequency Indexes (penalties only). Target performance is based on each utility’s historical 10-year average performance with a deadband of one standard deviation. The maximum penalty for each performance index is 20 basis points applied to the common equity share of each respective utility’s approved rate base (or maximum penalties of approximately $6.7 million - for both indices in total for the three utilities).

• Call Center Performance measured by the percentage of calls answered within 30 seconds. Target performance is based on the annual average performance for each utility for the most recent 8 quarters with a deadband of 3% above and below the target. The maximum penalty or incentive is 8 basis points applied to the common equity share of each respective utility’s approved rate base (or maximum penalties or incentives of approximately $1.3 million - in total for the three utilities).

• The Utilities accrued $2.1 million in estimated net service quality penalties for 2018, which will be reflected in the 2019 annual decoupling filing and will reduce customer rates in the period June 1, 2019 through May 31, 2020.

• Procurement of low-cost variable renewable resources through the request for proposal process in 2018 measured by comparison of the procurement price to target prices. The incentive is a percentage of the savings determined by comparing procured price to a target of 11.5 cents per kilowatt-hour for renewable projects with storage capability and 9.5 cents per kilowatt-hour for energy-only renewable projects. For PPAs filed by December 31, 2018 and subsequently approved by the PUC, the incentive is 20% of the savings, with a cap of $3.5 million for the three utilities in total. For PPAs filed in January, February, and March 2019 and subsequently approved by the PUC, scaled incentives are 15%, 10% and 5%, respectively, of the savings for PPAs, with a cap of $3 million for the three utilities in total. There are no penalties. On March 25, 2019, the PUC approved six contracts, which were filed by December 31, 2018 and qualified for incentives. Half of the incentive is earned upon PUC approval of the contact and the other half is eligible to be earned in the year following the in-service date of the projects. The Utilities accrued $1.7 million in incentives in March 2019.

Annual decoupling filings. The Utilities filed annual decoupling filings on March 29, 2019, which are subject to PUC review. The net annual incremental amounts proposed to be collected (refunded) from June 1, 2019 through May 31, 2020 are as follows:

(in millions)	Hawaiian Electric			Hawaii Electric Light			Maui Electric
2019 Annual incremental RAM adjusted revenues	$	14.0		$	3.5		$	3.3
Annual change in accrued RBA balance as of December 31, 2018 (and associated revenue taxes)	$	(12.2	)	$	(1.9	)	$	0.8
2017 Tax Act Adjustment*	$	—		$	—		$	2.8
Performance Incentive Mechanism	$	0.1		$	—		$	(0.4	)
Net annual incremental amount to be collected under the tariffs	$	1.9		$	1.6		$	6.5

*   Maui Electric incorporated a $2.8 million adjustment into its 2018 annual decoupling filing to incorporate the impact of the lower corporate income tax rate and the exclusion of the domestic production activities deduction, as a result of the 2017 Tax Cuts and Jobs Act (the Tax Act). This item is not recurring in 2019, therefore it is shown on this schedule of incremental changes as in increase.

Performance-based regulation proceeding. On April 18, 2018, the PUC issued an order, instituting a proceeding to investigate performance-based regulation (PBR). The PUC intends to provide a forum to collaboratively develop modifications or new components to better align utility and customer interests. The PUC stated that PBR seeks to utilize both revenue adjustment mechanisms and performance mechanisms to more strongly align utilities’ incentives with customer interests.

The order stated that, in general, the PUC is interested in ratemaking elements and/or mechanisms that result in:

• Greater cost control and reduced rate volatility;

• Efficient investment and allocation of resources regardless of classification as capital or operating expense;

• Fair distribution of risks between utilities and customers; and

• Fulfillment of State policy goals.

Through this investigation, the PUC intends to: (1) identify specific areas of utility performance that should be improved; (2) determine appropriate metrics for measuring successful outcomes in those areas; and (3) establish reasonable financial rewards and/or penalties that are sufficient to incent the utility to achieve those outcomes.

The proceeding has two phases. Phase 1 examines the current regulatory framework and identifies those areas of utility performance that are deserving of further focus in Phase 2. The PUC provided staff reports to the parties, held technical workshops and the parties filed briefs on: 1) goals and outcomes and 2) assessment of the existing regulatory framework and 3) metrics. PUC staff issued a Phase 1 proposal, and parties filed statements of position on March 8, 2019 and reply statements of position on April 5, 2019. A PUC decision on Phase 1 is pending. Phase 2 will address design and implementation of performance incentive mechanisms, revenue adjustment mechanisms and other regulatory reforms. 

Performance-based ratemaking legislation. On April 24, 2018, Act 005, Session Laws 2018 was signed into law, which establishes performance metrics that the PUC shall consider while establishing performance incentives and penalty mechanisms under a performance-based ratemaking model. The law requires that the PUC establish these performance-based ratemaking mechanisms on or before January 1, 2020. The PUC opened a proceeding on April 18, 2018. See “Performance-based regulation proceeding” above.

Most recent rate proceedings.

Hawaiian Electric consolidated 2014 and 2017 test year rate cases. On February 16, 2018, Hawaiian Electric implemented an interim increase of $36 million. On April 13, 2018, Hawaiian Electric implemented an additional interim rate adjustment to adjust rates for the impact of the Tax Act.

On June 22, 2018, the PUC issued its Final D&O, approving final rate relief of a $37.7 million increase before the Tax Act impact reduction of $38.3 million, based on an ROACE of 9.5% and an overall rate of return of 7.57%. The PUC indicated that a revised ECRC mechanism shall reflect a 98%/2% fossil fuel generation cost risk-sharing split between ratepayers and Hawaiian Electric, with an annual maximum increase or decrease to revenues of $2.5 million for the utility. On December 7, 2018, the PUC approved the ECRC tariff, consistent with the rate case order, with an effective date of January 1, 2019.

Hawaiian Electric 2020 test year rate case. On April 26, 2019, Hawaiian Electric filed a notice that it intends to file an application for a general rate increase after June 30, 2019, but not later than September 30, 2019, based on a 2020 calendar year test period.

Maui Electric consolidated 2015 and 2018 test year rate cases. On August 9, 2018, the PUC approved an interim rate increase based on a stipulated settlement, that included the effects of the 2017 Tax Act, between Maui Electric and the Consumer Advocate. On March 18, 2019, the PUC issued its D&O, that approved, with certain modifications, the stipulated settlement, addressed all issues in the rate case, and directed the utility to file tariffs and rate schedules reflecting the provisions of the D&O. The D&O stated that a revised ECRC mechanism would replace the ECAC and effectuate the removal of the recovery of fuel and purchased power from base rates. It also stated that the ECRC shall reflect a 98%/2% fossil fuel generation cost risk-sharing split between ratepayers and Maui Electric, with an annual maximum increase or decrease to revenues to $0.6 million for the utility.

On April 17, 2019, Maui Electric filed proposed tariffs, with an effective date of June 1, 2019, and rate schedules reflecting a final increase of $12.2 million over revenues at current effective rates based on the approved 7.43% rate of return (which incorporates a ROACE of 9.5% and a capital structure that includes a 57% common equity capitalization) on a $454 million rate base. Upon the approval of the ECRC tariff, Maui Electric will file revised tariffs to rebalance rates resulting from the recovery of all fuel and purchased energy through the ECRC and the removal of the recovery of these costs from base rates.

Hawaii Electric Light 2016 and 2019 test year rate cases. In August 2017, the PUC issued an order granting an interim rate increase of $9.9 million based on the Stipulated Settlement Letter of Hawaii Electric Light and the Consumer Advocate filed on July 11, 2017 and an ROACE of 9.5% and subject to refund with interest, if it exceeds amounts allowed in a final order. The interim rate increase was implemented on August 31, 2017. On May 1, 2018, Hawaii Electric Light implemented an interim rate reduction of $9.9 million which was primarily to incorporate the effects of the Tax Act. On June 29, 2018, the PUC issued its Final D&O, approving the rates implemented in the interim rate reduction. On January 15, 2019, the PUC approved the ECRC tariff with an effective date of February 1, 2019.

On December 14, 2018, Hawaii Electric Light filed an application for a general rate increase for its 2019 test year rate case, requesting an increase of $13.4 million over revenues at current effective rates (for a 3.4% increase in revenues), based on an 8.3% rate of return (which incorporates a ROACE of 10.5%).Condensed consolidating financial information. Hawaiian Electric is not required to provide separate financial statements or other disclosures concerning Hawaii Electric Light and Maui Electric to holders of the 2004 Debentures, which was issued by Hawaii Electric Light and Maui Electric to Trust III, since all of their voting capital stock is owned, and their obligations with respect to these securities have been fully and unconditionally guaranteed, on a subordinated basis, by Hawaiian Electric. Consolidating information is provided below for Hawaiian Electric and each of its subsidiaries for the periods ended and as of the dates indicated.

Hawaiian Electric also unconditionally guarantees Hawaii Electric Light’s and Maui Electric’s obligations (a) to the State of Hawaii for the repayment of principal and interest on Special Purpose Revenue Bonds issued for the benefit of Hawaii Electric Light and Maui Electric, (b) under their respective private placement note agreements and the Hawaii Electric Light notes and Maui Electric notes issued thereunder and (c) relating to the trust preferred securities of Trust III. Hawaiian Electric is also obligated, after the satisfaction of its obligations on its own preferred stock, 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.

Hawaiian Electric Company, Inc. and Subsidiaries

Condensed Consolidating Statement of Income

Three months ended March 31, 2019

(in thousands)	Hawaiian Electric			Hawaii Electric Light		Maui Electric		Other subsidiaries	Consolidating adjustments		Hawaiian Electric Consolidated
Revenues	$	405,669		87,205		85,653		—	(32	)	$	578,495
Expenses
Fuel oil	108,922			20,842		30,845		—	—		160,609
Purchased power	105,223			19,177		10,045		—	—		134,445
Other operation and maintenance	81,178			18,736		18,216		—	—		118,130
Depreciation	35,867			10,453		7,627		—	—		53,947
Taxes, other than income taxes	38,631			8,105		8,068		—	—		54,804
Total expenses	369,821			77,313		74,801		—	—		521,935
Operating income	35,848			9,892		10,852		—	(32	)	56,560
Allowance for equity funds used during construction	2,447			132		331		—	—		2,910
Equity in earnings of subsidiaries	11,849			—		—		—	(11,849	)	—
Retirement defined benefits expense—other than service costs	(567		)	(106	)	(30	)	—	—		(703		)
Interest expense and other charges, net	(12,800		)	(2,901	)	(2,317	)	—	32		(17,986		)
Allowance for borrowed funds used during construction	902			56		120		—	—		1,078
Income before income taxes	37,679			7,073		8,956		—	(11,849	)	41,859
Income taxes	5,283			1,770		2,181		—	—		9,234
Net income	32,396			5,303		6,775		—	(11,849	)	32,625
Preferred stock dividends of subsidiaries	—			134		95		—	—		229
Net income attributable to Hawaiian Electric	32,396			5,169		6,680		—	(11,849	)	32,396
Preferred stock dividends of Hawaiian Electric	270			—		—		—	—		270
Net income for common stock	$	32,126		5,169		6,680		—	(11,849	)	$	32,126

Hawaiian Electric Company, Inc. and Subsidiaries

Condensed Consolidating Statement of Comprehensive Income

Three months ended March 31, 2019

(in thousands)	Hawaiian Electric			Hawaii Electric Light		Maui Electric		Other subsidiaries	Consolidating adjustments		Hawaiian Electric Consolidated
Net income for common stock	$	32,126		5,169		6,680		—	(11,849	)	$	32,126
Other comprehensive income (loss), net of taxes:
Retirement benefit plans:
Adjustment for amortization of prior service credit and net losses recognized during the period in net periodic benefit cost, net of tax benefits	2,322			352		289		—	(641	)	2,322
Reclassification adjustment for impact of D&Os of the PUC included in regulatory assets, net of taxes	(2,298		)	(351	)	(289	)	—	640		(2,298		)
Other comprehensive income, net of taxes	24			1		—		—	(1	)	24
Comprehensive income attributable to common shareholder	$	32,150		5,170		6,680		—	(11,850	)	$	32,150

Hawaiian Electric Company, Inc. and Subsidiaries

Condensed Consolidating Statement of Income

Three months ended March 31, 2018

(in thousands)	Hawaiian Electric			Hawaii Electric Light		Maui Electric		Other subsidiaries	Consolidating adjustments		Hawaiian Electric Consolidated
Revenues	$	401,180		87,933		81,356		—	(42	)	$	570,427
Expenses
Fuel oil	114,498			18,487		33,983		—	—		166,968
Purchased power	107,370			23,834		8,706		—	—		139,910
Other operation and maintenance	72,940			16,098		18,572		—	—		107,610
Depreciation	34,439			10,055		5,972		—	—		50,466
Taxes, other than income taxes	38,167			8,212		7,725		—	—		54,104
Total expenses	367,414			76,686		74,958		—	—		519,058
Operating income	33,766			11,247		6,398		—	(42	)	51,369
Allowance for equity funds used during construction	2,887			111		296		—	—		3,294
Equity in earnings of subsidiaries	9,325			—		—		—	(9,325	)	—
Retirement defined benefits expense—other than service costs	(1,062		)	(103	)	(99	)	—	—		(1,264		)
Interest expense and other charges, net	(12,495		)	(2,907	)	(2,334	)	—	42		(17,694		)
Allowance for borrowed funds used during construction	1,238			64		142		—	—		1,444
Income before income taxes	33,659			8,412		4,403		—	(9,325	)	37,149
Income taxes	5,914			2,177		1,084		—	—		9,175
Net income	27,745			6,235		3,319		—	(9,325	)	27,974
Preferred stock dividends of subsidiaries	—			134		95		—	—		229
Net income attributable to Hawaiian Electric	27,745			6,101		3,224		—	(9,325	)	27,745
Preferred stock dividends of Hawaiian Electric	270			—		—		—	—		270
Net income for common stock	$	27,475		6,101		3,224		—	(9,325	)	$	27,475

Hawaiian Electric Company, Inc. and Subsidiaries

Condensed Consolidating Statement of Comprehensive Income

Three months ended March 31, 2018

(in thousands)	Hawaiian Electric			Hawaii Electric Light		Maui Electric		Other subsidiaries	Consolidating adjustments		Hawaiian Electric Consolidated
Net income for common stock	$	27,475		6,101		3,224		—	(9,325	)	$	27,475
Other comprehensive income (loss), net of taxes:
Retirement benefit plans:
Adjustment for amortization of prior service credit and net losses recognized during the period in net periodic benefit cost, net of tax benefits	4,653			675		562		—	(1,237	)	4,653
Reclassification adjustment for impact of D&Os of the PUC included in regulatory assets, net of taxes	(4,622		)	(675	)	(562	)	—	1,237		(4,622		)
Other comprehensive income, net of taxes	31			—		—		—	—		31
Comprehensive income attributable to common shareholder	$	27,506		6,101		3,224		—	(9,325	)	$	27,506

Hawaiian Electric Company, Inc. and Subsidiaries

Condensed Consolidating Balance Sheet

March 31, 2019

(in thousands)	Hawaiian Electric			Hawaii Electric Light		Maui Electric		Other subsidiaries	Consoli- dating adjustments		Hawaiian Electric Consolidated
Assets
Property, plant and equipment
Utility property, plant and equipment
Land	$	40,449		5,606		3,612		—	—		$	49,667
Plant and equipment	4,505,063			1,262,332		1,107,173		—	—		6,874,568
Less accumulated depreciation	(1,548,895		)	(554,438	)	(511,881	)	—	—		(2,615,214		)
Construction in progress	200,399			14,520		32,398		—	—		247,317
Utility property, plant and equipment, net	3,197,016			728,020		631,302		—	—		4,556,338
Nonutility property, plant and equipment, less accumulated depreciation	5,313			115		1,532		—	—		6,960
Total property, plant and equipment, net	3,202,329			728,135		632,834		—	—		4,563,298
Investment in wholly owned subsidiaries, at equity	582,374			—		—		—	(582,374	)	—
Current assets
Cash and cash equivalents	2,994			3,825		1,461		101	—		8,381
Advances to affiliates	9,500			9,200		—		—	(18,700	)	—
Customer accounts receivable, net	94,489			23,373		19,551		—	—		137,413
Accrued unbilled revenues, net	69,315			13,398		13,192		—	—		95,905
Other accounts receivable, net	10,667			1,447		1,967		—	(6,828	)	7,253
Fuel oil stock, at average cost	91,090			10,796		14,612		—	—		116,498
Materials and supplies, at average cost	30,766			8,037		17,781		—	—		56,584
Prepayments and other	25,940			3,944		4,003		—	—		33,887
Regulatory assets	60,374			2,993		8,651		—	—		72,018
Total current assets	395,135			77,013		81,218		101	(25,528	)	527,939
Other long-term assets
Operating lease right-of-use assets	219,246			1,605		410		—	—		221,261
Regulatory assets	530,424			118,315		105,429		—	—		754,168
Other	71,528			16,076		16,618		—	—		104,222
Total other long-term assets	821,198			135,996		122,457		—	—		1,079,651
Total assets	$	5,001,036		941,144		836,509		101	(607,902	)	$	6,170,888
Capitalization and liabilities
Capitalization
Common stock equity	$	1,964,478		298,497		283,776		101	(582,374	)	$	1,964,478
Cumulative preferred stock—not subject to mandatory redemption	22,293			7,000		5,000		—	—		34,293
Long-term debt, net	938,284			217,775		180,957		—	—		1,337,016
Total capitalization	2,925,055			523,272		469,733		101	(582,374	)	3,335,787
Current liabilities
Current portion of operating lease liabilities	61,149			91		29		—	—		61,269
Current portion of long-term debt	61,968			—		19,989		—	—		81,957
Short-term borrowings from non-affiliates	55,999			—		—		—	—		55,999
Short-term borrowings from affiliate	9,200			—		9,500		—	(18,700	)	—
Accounts payable	120,366			14,391		21,389		—	—		156,146
Interest and preferred dividends payable	19,629			4,073		3,929		—	(23	)	27,608
Taxes accrued	135,189			29,238		28,907		—	—		193,334
Regulatory liabilities	3,981			3,882		4,750		—	—		12,613
Other	45,380			9,355		14,493		—	(6,805	)	62,423
Total current liabilities	512,861			61,030		102,986		—	(25,528	)	651,349
Deferred credits and other liabilities
Operating lease liabilities	157,980			1,513		382		—	—		159,875
Deferred income taxes	271,098			53,967		57,607		—	—		382,672
Regulatory liabilities	664,229			177,240		99,137		—	—		940,606
Unamortized tax credits	60,323			16,366		14,880		—	—		91,569
Defined benefit pension and other postretirement benefit plans liability	359,109			72,991		71,304		—	—		503,404
Other	50,381			34,765		20,480		—	—		105,626
Total deferred credits and other liabilities	1,563,120			356,842		263,790		—	—		2,183,752
Total capitalization and liabilities	$	5,001,036		941,144		836,509		101	(607,902	)	$	6,170,888

Hawaiian Electric Company, Inc. and Subsidiaries

Condensed Consolidating Balance Sheet

December 31, 2018

(in thousands)	Hawaiian Electric			Hawaii Electric Light		Maui Electric		Other subsidiaries	Consoli- dating adjustments		Hawaiian Electric Consolidated
Assets
Property, plant and equipment
Utility property, plant and equipment
Land	$	40,449		5,606		3,612		—	—		$	49,667
Plant and equipment	4,456,090			1,259,553		1,094,028		—	—		6,809,671
Less accumulated depreciation	(1,523,861		)	(547,848	)	(505,633	)	—	—		(2,577,342		)
Construction in progress	193,677			8,781		30,687		—	—		233,145
Utility property, plant and equipment, net	3,166,355			726,092		622,694		—	—		4,515,141
Nonutility property, plant and equipment, less accumulated depreciation	5,314			115		1,532		—	—		6,961
Total property, plant and equipment, net	3,171,669			726,207		624,226		—	—		4,522,102
Investment in wholly owned subsidiaries, at equity	576,838			—		—		—	(576,838	)	—
Current assets
Cash and cash equivalents	16,732			15,623		3,421		101	—		35,877
Customer accounts receivable, net	125,960			26,483		25,453		—	—		177,896
Accrued unbilled revenues, net	88,060			17,051		16,627		—	—		121,738
Other accounts receivable, net	21,962			3,131		3,033		—	(21,911	)	6,215
Fuel oil stock, at average cost	54,262			11,027		14,646		—	—		79,935
Materials and supplies, at average cost	30,291			7,155		17,758		—	—		55,204
Prepayments and other	23,214			5,212		3,692		—	—		32,118
Regulatory assets	60,093			3,177		7,746		—	—		71,016
Total current assets	420,574			88,859		92,376		101	(21,911	)	579,999
Other long-term assets
Regulatory assets	537,708			120,658		104,044		—	—		762,410
Other	69,749			15,944		17,299		—	—		102,992
Total other long-term assets	607,457			136,602		121,343		—	—		865,402
Total assets	$	4,776,538		951,668		837,945		101	(598,749	)	$	5,967,503
Capitalization and liabilities
Capitalization
Common stock equity	$	1,957,641		295,874		280,863		101	(576,838	)	$	1,957,641
Cumulative preferred stock—not subject to mandatory redemption	22,293			7,000		5,000		—	—		34,293
Long-term debt, net	1,000,137			217,749		200,916		—	—		1,418,802
Total capitalization	2,980,071			520,623		486,779		101	(576,838	)	3,410,736
Current liabilities
Short-term borrowings-non-affiliate	25,000			—		—		—	—		25,000
Accounts payable	126,384			20,045		25,362		—	—		171,791
Interest and preferred dividends payable	16,203			4,203		2,841		—	(32	)	23,215
Taxes accrued	164,747			34,128		34,458		—	—		233,333
Regulatory liabilities	7,699			4,872		5,406		—	—		17,977
Other	46,391			15,077		20,414		—	(21,879	)	60,003
Total current liabilities	386,424			78,325		88,481		—	(21,911	)	531,319
Deferred credits and other liabilities
Deferred income taxes	271,438			54,936		56,823		—	—		383,197
Regulatory liabilities	657,210			176,101		98,948		—	—		932,259
Unamortized tax credits	60,271			16,217		15,034		—	—		91,522
Defined benefit pension and other postretirement benefit plans liability	359,174			73,147		71,338		—	—		503,659
Other	61,950			32,319		20,542		—	—		114,811
Total deferred credits and other liabilities	1,410,043			352,720		262,685		—	—		2,025,448
Total capitalization and liabilities	$	4,776,538		951,668		837,945		101	(598,749	)	$	5,967,503

Hawaiian Electric Company, Inc. and Subsidiaries

Condensed Consolidating Statement of Changes in Common Stock Equity

Three months ended March 31, 2019

(in thousands)	Hawaiian Electric			Hawaii Electric Light		Maui Electric		Other subsidiaries	Consolidating adjustments		Hawaiian Electric Consolidated
Balance, December 31, 2018	$	1,957,641		295,874		280,863		101	(576,838	)	$	1,957,641
Net income for common stock	32,126			5,169		6,680		—	(11,849	)	32,126
Other comprehensive income, net of taxes	24			1		—		—	(1	)	24
Common stock dividends	(25,313		)	(2,545	)	(3,767	)	—	6,312		(25,313		)
Common stock issuance expenses	—			(2	)	—		—	2		—
Balance, March 31, 2019	$	1,964,478		298,497		283,776		101	(582,374	)	$	1,964,478

Hawaiian Electric Company, Inc. and Subsidiaries

Condensed Consolidating Statement of Changes in Common Stock Equity

Three months ended March 31, 2018  

(in thousands)	Hawaiian Electric			Hawaii Electric Light		Maui Electric		Other subsidiaries	Consolidating adjustments		Hawaiian Electric Consolidated
Balance, December 31, 2017	$	1,845,283		286,647		270,265		101	(557,013	)	$	1,845,283
Net income for common stock	27,475			6,101		3,224		—	(9,325	)	27,475
Other comprehensive income, net of taxes	31			—		—		—	—		31
Common stock dividends	(25,826		)	(3,821	)	(3,006	)	—	6,827		(25,826		)
Common stock issuance expenses	(8		)	—		—		—	—		(8		)
Balance, March 31, 2018	$	1,846,955		288,927		270,483		101	(559,511	)	$	1,846,955

Hawaiian Electric Company, Inc. and Subsidiaries

Condensed Consolidating Statement of Cash Flows

Three months ended March 31, 2019

(in thousands)	Hawaiian Electric			Hawaii Electric Light		Maui Electric		Other subsidiaries	Consolidating adjustments		Hawaiian Electric Consolidated
Cash flows from operating activities
Net income	$	32,396		5,303		6,775		—	(11,849	)	$	32,625
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in earnings of subsidiaries	(11,874		)	—		—		—	11,849		(25		)
Common stock dividends received from subsidiaries	6,311			—		—		—	(6,311	)	—
Depreciation of property, plant and equipment	35,867			10,453		7,627		—	—		53,947
Other amortization	5,740			1,072		(98	)	—	—		6,714
Deferred income taxes	(2,757		)	(987	)	617		—	—		(3,127		)
Allowance for equity funds used during construction	(2,447		)	(132	)	(331	)	—	—		(2,910		)
Other	(1,288		)	(145	)	(384	)	—	—		(1,817		)
Changes in assets and liabilities:
Decrease in accounts receivable	42,419			4,194		5,633		—	(15,083	)	37,163
Decrease in accrued unbilled revenues	18,745			3,653		3,435		—	—		25,833
Decrease (increase) in fuel oil stock	(36,828		)	230		34		—	—		(36,564		)
Increase in materials and supplies	(475		)	(883	)	(23	)	—	—		(1,381		)
Increase in regulatory assets	(1,114		)	(212	)	(3,714	)	—	—		(5,040		)
Increase (decrease) in accounts payable	6,251			(4,253	)	(2,925	)	—	—		(927		)
Change in prepaid and accrued income taxes, tax credits and revenue taxes	(25,874		)	(4,078	)	(4,716	)	—	—		(34,668		)
Increase in defined benefit pension and other postretirement benefit plans liability	2,322			313		356		—	—		2,991
Change in other assets and liabilities	(9,249		)	(5,783	)	(3,449	)	—	15,083		(3,398		)
Net cash provided by operating activities	58,145			8,745		8,837		—	(6,311	)	69,416
Cash flows from investing activities
Capital expenditures	(78,220		)	(8,371	)	(16,300	)	—	—		(102,891		)
Advances (to) from affiliates	(9,500		)	(9,200	)	—		—	18,700		—
Other	1,221			(293	)	(134	)	—	—		794
Net cash used in investing activities	(86,499		)	(17,864	)	(16,434	)	—	18,700		(102,097		)
Cash flows from financing activities
Common stock dividends	(25,313		)	(2,544	)	(3,767	)	—	6,311		(25,313		)
Preferred stock dividends of Hawaiian Electric and subsidiaries	(270		)	(134	)	(95	)	—	—		(499		)
Increase (decrease) in short-term borrowings from non-affiliates and affiliate with original maturities of three months or less	15,199			—		9,500		—	(18,700	)	5,999
Proceeds from other bank borrowings	25,000			—		—		—	—		25,000
Other	—			(1	)	(1	)	—	—		(2		)
Net cash provided by (used in) financing activities	14,616			(2,679	)	5,637		—	(12,389	)	5,185
Net decrease in cash and cash equivalents	(13,738		)	(11,798	)	(1,960	)	—	—		(27,496		)
Cash and cash equivalents, beginning of period	16,732			15,623		3,421		101	—		35,877
Cash and cash equivalents, end of period	$	2,994		3,825		1,461		101	—		$	8,381

Hawaiian Electric Company, Inc. and Subsidiaries

Condensed Consolidating Statement of Cash Flows

Three months ended March 31, 2018

(in thousands)	Hawaiian Electric			Hawaii Electric Light		Maui Electric		Other subsidiaries	Consolidating adjustments		Hawaiian Electric Consolidated
Cash flows from operating activities
Net income	$	27,745		6,235		3,319		—	(9,325	)	$	27,974
Adjustments to reconcile net income to net cash provided by operating activities:
Equity in earnings of subsidiaries	(9,350		)	—		—		—	9,325		(25		)
Common stock dividends received from subsidiaries	6,827			—		—		—	(6,827	)	—
Depreciation of property, plant and equipment	34,439			10,055		5,972		—	—		50,466
Other amortization	3,237			1,554		553		—	—		5,344
Deferred income taxes	(271		)	(1,806	)	497		—	—		(1,580		)
Allowance for equity funds used during construction	(2,887		)	(111	)	(296	)	—	—		(3,294		)
Other	2,868			(103	)	(84	)	—	—		2,681
Changes in assets and liabilities:
Increase in accounts receivable	(13,255		)	(2,048	)	(1,396	)	—	1,662		(15,037		)
Increase in accrued unbilled revenues	6,558			758		103		—	—		7,419
Decrease (increase) in fuel oil stock	(1,322		)	(803	)	275		—	—		(1,850		)
Decrease (increase) in materials and supplies	(1,095		)	(550	)	350		—	—		(1,295		)
Increase in regulatory assets	(13,256		)	(1,773	)	(1,871	)	—	—		(16,900		)
Increase (decrease) in accounts payable	(2,028		)	4,050		3,121		—	—		5,143
Change in prepaid and accrued income taxes, tax credits and revenue taxes	(25,892		)	(1,882	)	(5,532	)	—	440		(32,866		)
Decrease in defined benefit pension and other postretirement benefit plans liability	(592		)	(198	)	(148	)	—	—		(938		)
Change in other assets and liabilities	2,976			2,875		349		—	(1,662	)	4,538
Net cash provided by operating activities	14,702			16,253		5,212		—	(6,387	)	29,780
Cash flows from investing activities
Capital expenditures	(80,899		)	(14,505	)	(14,723	)	—	—		(110,127		)
Advances (to) from affiliates	(3,000		)	—		12,000		—	(9,000	)	—
Other	269			264		510		—	(440	)	603
Net cash used in investing activities	(83,630		)	(14,241	)	(2,213	)	—	(9,440	)	(109,524		)
Cash flows from financing activities
Common stock dividends	(25,826		)	(3,821	)	(3,006	)	—	6,827		(25,826		)
Preferred stock dividends of Hawaiian Electric and subsidiaries	(270		)	(134	)	(95	)	—	—		(499		)
Net increase in short-term borrowings from non-affiliates and affiliate with original maturities of three months or less	104,984			3,000		—		—	9,000		116,984
Other	(31		)	(2	)	—		—	—		(33		)
Net cash provided by (used in) financing activities	78,857			(957	)	(3,101	)	—	15,827		90,626
Net increase (decrease) in cash and cash equivalents	9,929			1,055		(102	)	—	—		10,882
Cash and cash equivalents, beginning of period	2,059			4,025		6,332		101	—		12,517
Cash and cash equivalents, end of period	$	11,988		5,080		6,230		101	—		$	23,399