Income taxes (Tables)

12 Months Ended

Dec. 31, 2021

Components of income taxes attributable to net income for common stock

The components of income taxes attributable to net income for common stock were as follows:


	HEI consolidated						Hawaiian Electric consolidated
Years ended December 31	2021		2020		2019		2021		2020		2019
(in thousands)
Federal
Current	$	51,455	$	23,207	$	28,736	$	42,794	$	31,950	$	21,751
Deferred	(11,689)		(4,215)		(4,353)		(12,109)		(5,408)		(7,793)
Deferred tax credits, net*	4,611		10,979		13,410		302		1,549		13,155
	44,377		29,971		37,793		30,987		28,091		27,113
State
Current	12,119		8,430		10,472		4,861		3,768		5,579
Deferred	6,290		2,509		(10,732)		8,279		8,559		(8,491)
Deferred tax credits, net*	21		—		14,104		21		—		14,104
	18,430		10,939		13,844		13,161		12,327		11,192
Total	$	62,807	$	40,910	$	51,637	$	44,148	$	40,418	$	38,305

* In 2021 and 2020, primarily represents federal tax credits related to Mauo’s solar-plus-storage project, deferred and amortized starting in 2021 and 2020, respectively. In 2019, primarily represents federal and state credits related to Hawaiian Electric’s West Loch PV project, deferred and amortized starting in 2020.

Schedule of reconciliation of amount of income taxes computed at federal statutory rate

A reconciliation of the amount of income taxes computed at the federal statutory rate to the amount provided in the consolidated statements of income was as follows:


	HEI consolidated									Hawaiian Electric consolidated
Years ended December 31	2021			2020			2019			2021			2020			2019
(in thousands)
Amount at the federal statutory income tax rate	$	65,281		$	50,531		$	56,996		$	46,995		$	44,468		$	41,399
Increase (decrease) resulting from:
State income taxes, net of federal income tax benefit	15,735			9,448			11,658			10,323			9,658			8,703
Net deferred tax asset (liability) adjustment related to the Tax Act	(9,886)			(11,267)			(9,255)			(9,886)			(11,267)			(9,255)
Other, net	(8,323)			(7,802)			(7,762)			(3,284)			(2,441)			(2,542)
Total	$	62,807		$	40,910		$	51,637		$	44,148		$	40,418		$	38,305
Effective income tax rate	20.2		%	17.0		%	19.0		%	19.7		%	19.1		%	19.4		%

Schedule of deferred tax assets and liabilities

The tax effects of book and tax basis differences that give rise to deferred tax assets and liabilities were as follows:


	HEI consolidated				Hawaiian Electric consolidated
December 31	2021		2020		2021		2020
(in thousands)
Deferred tax assets
Regulatory liabilities, excluding amounts attributable to property, plant and equipment	$	87,817	$	93,684	$	87,817	$	93,684


Operating lease liabilities	35,449		41,582		29,661		34,586
Revenue taxes	35,040		22,726		35,040		22,726
Allowance for bad debts	26,217		31,973		7,156		4,835
Other1	58,518		44,127		20,529		24,741
Total deferred tax assets	243,041		234,092		180,203		180,572
Deferred tax liabilities
Property, plant and equipment related	500,659		487,209		490,713		473,734

Operating lease right-of-use assets	35,271		41,370		29,661		34,586
Regulatory assets, excluding amounts attributable to property, plant and equipment	23,700		25,841		23,700		25,841

Retirement benefits	6,863		18,407		8,261		20,537

Other	61,308		56,354		36,502		23,672
Total deferred tax liabilities	627,801		629,181		588,837		578,370
Net deferred income tax liability	$	384,760	$	395,089	$	408,634	$	397,798

1 As of December 31, 2021, HEI consolidated and Hawaiian Electric consolidated have deferred tax assets of $11.0 million and $2.5 million respectively, relating to the benefit of state tax credit carryforwards of $14.6 million and $3.4 million respectively. These state tax credit carryforwards primarily relate to the West Loch PV project and do not expire. The Company concluded that as of December 31, 2021, a valuation allowance is not required.

Schedule of changes in total unrecognized tax benefits

The following is a reconciliation of the Company’s liability for unrecognized tax benefits for 2021, 2020 and 2019.


	HEI consolidated						Hawaiian Electric consolidated
(in millions)	2021		2020		2019		2021		2020		2019
Unrecognized tax benefits, January 1	$	12.7	$	2.2	$	2.1	$	12.7	$	1.7	$	1.6
Additions based on tax positions taken during the year	2.8		0.2		0.5		0.3		0.2		0.5
Reductions based on tax positions taken during the year	(0.5)		—		—		—		—		—
Additions for tax positions of prior years	7.6		11.6		0.1		0.2		11.6		0.1
Reductions for tax positions of prior years	(5.5)		(0.1)		(0.2)		(1.6)		(0.1)		(0.2)
Lapses of statute of limitations	—		(0.2)		(0.3)		—		(0.2)		(0.3)
Settlement	—		(1.0)		—		—		(0.5)		—
Unrecognized tax benefits, December 31	$	17.1	$	12.7	$	2.2	$	11.6	$	12.7	$	1.7