Regulatory restrictions on net assets

12 Months Ended

Dec. 31, 2024

Broker-Dealer, Net Capital Requirement, SEC Regulation [Abstract]


Note 15 · Regulatory restrictions on net assets

The ability of Hawaiian Electric to pay dividends or make other distributions to HEI are subject to contractual and regulatory restrictions. Under the PUC Agreement, in the event that the consolidated common stock equity of the electric utility subsidiaries falls below 35% of the total capitalization of the electric utilities (including the current maturities of long-term debt, but excluding short-term borrowings), the electric utility subsidiaries would, absent PUC approval, be restricted in their payment of cash dividends to 80% of the earnings available for the payment of dividends in the current fiscal year and preceding five years, less the amount of dividends paid during that period. The PUC Agreement also provides that the foregoing dividend restriction shall not be construed as relinquishing any right the PUC may have to review the dividend policies of the electric utility subsidiaries. As of December 31, 2024, the consolidated common stock equity of HEI’s electric utility subsidiaries was 33% of their total capitalization, which includes finance lease liabilities in the calculation of total capitalization. The Utilities plan to file with the PUC, a modified capitalization ratio of 37% to align with its debt covenant requirements, which excludes finance lease liabilities resulting from power purchase agreements. As of December 31, 2024, Hawaiian Electric and its subsidiaries had common stock equity of $1.2 billion, which, in total, was not available for transfer to HEI in the form of dividends, loans or advances without regulatory approval.

HEI and its subsidiaries are also subject to debt covenants, preferred stock resolutions and the terms of guarantees that could limit their respective abilities to pay dividends. The Company does not expect that the regulatory and contractual restrictions applicable to HEI and/or its subsidiaries will significantly affect the operations of HEI.