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Electric utility segment

12 Months Ended

Dec. 31, 2020

Electric utility subsidiary

Electric utility segment

Note 3 · Electric utility segment

Regulatory assets and liabilities.  Regulatory assets represent deferred costs and accrued decoupling revenues which are expected to be recovered through rates over PUC-authorized periods. Generally, the Utilities do not earn a return on their regulatory assets; however, they have been allowed to recover interest on certain regulatory assets and to include certain regulatory assets in rate base. Regulatory liabilities represent amounts included in rates and collected from ratepayers for costs expected to be incurred in the future, or amounts collected in excess of costs incurred that are refundable to customers. For example, the regulatory liability for cost of removal in excess of salvage value represents amounts that have been collected from ratepayers for costs that are expected to be incurred in the future to retire utility plant. Generally, the Utilities include regulatory liabilities in rate base or are required to apply interest to certain regulatory liabilities. In the table below, noted in parentheses are the original PUC authorized amortization or recovery periods and, if different, the remaining amortization or recovery periods as of December 31, 2020 are noted.

Regulatory assets were as follows:

December 31			2020						2019
(in thousands)
Retirement benefit plans (balance primarily varies with plans’ funded statuses)			$	592,644					$	554,485
Income taxes (1-55 years)			96,171						102,612
Decoupling revenue balancing account and RAM (1-2 years)			10,432						—
Unamortized expense and premiums on retired debt and equity issuances (1-19 years; 1-18 years remaining)			8,654						10,228
Vacation earned, but not yet taken (1 year)			15,665						12,535
COVID-19 related costs (to be determined by PUC)			18,032						—
Other (1-39 years remaining)			25,110						35,220
Total regulatory assets			$	766,708					$	715,080
Included in:
Current assets			$	30,435					$	30,710
Long-term assets			736,273						684,370
Total regulatory assets			$	766,708					$	715,080

Regulatory liabilities were as follows:

December 31			2020						2019
(in thousands)
Cost of removal in excess of salvage value (1-79 years)			$	541,730					$	521,977
Income taxes (1-55 years)			360,426						386,990
Decoupling revenue balancing account and RAM (1-2 years)			1,957						16,370
Retirement benefit plans (balance primarily varies with plans’ funded statuses)			29,759						21,707
Other (1-18 years remaining)			25,914						25,266
Total regulatory liabilities			$	959,786					$	972,310
Included in:
Current liabilities			$	37,301					$	30,724
Long-term liabilities			922,485						941,586
Total regulatory liabilities			$	959,786					$	972,310

The regulatory asset and liability relating to retirement benefit plans was recorded as a result of pension and OPEB tracking mechanisms adopted by the PUC in rate case decisions for the Utilities in 2007 (see Note 10).

Major customers.  The Utilities received 11% ($249 million), 11% ($281 million) and 11% ($273 million) of their operating revenues from the sale of electricity to various federal government agencies in 2020, 2019 and 2018, respectively.

Cumulative preferred stock. The following series of cumulative preferred stock are redeemable only at the option of the respective company at the following prices in the event of voluntary liquidation or redemption:

December 31, 2020			Voluntary liquidation price						Redemption price
Series
C, D, E, H, J and K (Hawaiian Electric)			$	20					$	21
I (Hawaiian Electric)			20						20
G (Hawaii Electric Light)			100						100
H (Maui Electric)			100						100

Hawaiian Electric is obligated to make dividend, redemption and liquidation payments on the preferred stock of each of its subsidiaries if the respective subsidiary is unable to make such payments, but this obligation is subordinated to Hawaiian Electric’s obligation to make payments on its own preferred stock.

Related-party transactions. HEI charged the Utilities $5.6 million, $6.0 million and $5.9 million for general management and administrative services in 2020, 2019 and 2018, respectively. The amounts charged by HEI to its subsidiaries for services provided by HEI employees are allocated primarily on the basis of time expended in providing such services.

For the years ended December 31, 2020 and December 31, 2019, Hamakua Energy, LLC (an indirect subsidiary of HEI) sold energy and capacity to Hawaii Electric Light (subsidiary of Hawaiian Electric and indirect subsidiary of HEI) under a PPA in the amount of $50 million and $68 million, respectively.

Hawaiian Electric’s short-term borrowings from HEI totaled nil at December 31, 2020 and 2019. Borrowings among the Utilities are eliminated in consolidation. Interest charged by HEI to Hawaiian Electric was not material for the years ended December 31, 2020 and 2019.

Unconsolidated variable interest entities.

Power purchase agreements.  As of December 31, 2020, the Utilities had four PPAs for firm capacity (excluding the Puna Geothermal Venture (PGV) PPA as PGV had been offline since May 2018 due to lava flow on Hawaii Island, but returned to service at a level providing limited output without firm capacity in the fourth quarter of 2020) 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 are 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 consolidated financial statements. Hamakua Energy is an indirect subsidiary of Pacific Current, and is consolidated in HEI’s 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 Consolidated Financial Statements. The consolidation of any significant IPP could have a material effect on the 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.

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.

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

Years ended December 31						2020						2019						2018
(in millions)
Kalaeloa						$	149					$	214					$	216
AES Hawaii						133						139						140
HPOWER						70						76						69
Hamakua Energy						50						68						56
Puna Geothermal Venture						1						—						15
Wind IPPs						105						95						107
Solar IPPs						57						36						29
Other IPPs1						4						5						7
Total IPPs						$	569					$	633					$	639

1 Includes hydro power and other PPAs

As of December 31, 2020, the Utilities had four firm capacity PPAs for a total of 516.5 megawatts (MW) of firm capacity and excludes the PGV facility. The PGV facility with 34.6 MW of firm capacity had been offline since May 2018 due to lava flow on Hawaii Island, but returned to service at a level providing limited output without firm capacity in the fourth quarter of 2020. The PUC allows rate recovery for energy and firm capacity payments to IPPs under these agreements. Assuming that each of the agreements remains in place for its current term (and as amended) and the minimum availability criteria in the PPAs are met, aggregate minimum fixed capacity charges, excluding the PGV facility, are expected to be approximately $93 million in 2021, $72 million in 2022, $30 million each in 2023, 2024 and 2025, and $188 million from 2026 through 2033.

In general, the Utilities base their payments under the PPAs upon available capacity and actual energy supplied and they are generally not required to make payments for capacity if the contracted capacity is not available, and payments are reduced, under certain conditions, if available capacity drops below contracted levels. In general, the payment rates for capacity have been predetermined for the terms of the agreements. Energy payments will vary over the terms of the agreements. The Utilities pass on changes in the fuel component of the energy charges to customers through the energy cost adjustment clause (ECRC) in their rate schedules. The Utilities do not operate, or participate in the operation of, any of the facilities that provide power under the agreements. Title to the facilities does not pass to Hawaiian Electric or its subsidiaries upon expiration of the agreements, and the agreements do not contain bargain purchase options for the facilities.

Purchase power adjustment clause. The PUC has approved purchased power adjustment clauses (PPACs) for the Utilities. Purchased power capacity, operation and maintenance (O&M) and other non-energy costs previously recovered through base rates are now recovered in the PPACs and, subject to approval by the PUC, such costs resulting from new purchased power agreements can be added to the PPACs outside of a rate case. Purchased energy costs continue to be recovered through the ECRC.

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 continue 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 April 30, 2021, to allow for a negotiated resolution.

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 State of Hawaii Department of Health (DOH) decision on AES Hawaii’s 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 9, 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. On May 10, 2019, the Hawaii Supreme Court issued a decision remanding the matter to the PUC for further proceedings consistent with the court’s decision which must include express consideration of greenhouse gas (GHG) emissions that would result from approving the PPA, whether the cost of energy under the PPA is reasonable in light of the potential for GHG emissions, and whether the terms of the PPA are prudent and in the public interest, in light of its potential hidden and long-term consequences. On June 20, 2019, the PUC issued an order reopening the docket for further proceedings, including re-examining all of the issues in the proceedings. On September 29, 2019, the PUC issued an order setting the procedural schedule for the matter and on December 20, 2019, issued an order modifying the procedural schedule. Pre-hearing matters were completed on March 6, 2020. On July 9, 2020, the PUC issued an order denying Hawaii Electric Light’s request to waive the amended and restated PPA from the PUC’s competitive bidding requirements and therefore, dismissed the request for approval of the amended and restated PPA without prejudice to possible participation in any future competitive bidding process. On July 20, 2020, Hu Honua filed a motion for reconsideration of the PUC’s order which was denied by the PUC on September 9, 2020. On September 16, 2020, Hu Honua filed its notice of appeal to the Hawaii Supreme Court of the PUC’s order denying Hu Honua’s motion for reconsideration.

Molokai New Energy Partners (MNEP). In July 2018, the PUC approved Maui Electric’s PPA with MNEP to purchase solar energy from a PV plus battery storage project. The 4.88 MW photovoltaic (PV) and 3 MW Battery Energy Storage System project was to deliver no more than 2.64 MW at any time to the Molokai system. On March 25, 2020, MNEP filed a complaint in the United Stated District Court for the District of Hawaii against Maui Electric claiming breach of contract. On June 3, 2020, Maui Electric provided Notice of Default and Termination of the PPA to MNEP terminating the PPA with an effective date of July 10, 2020. Thereafter, MNEP filed an amended Complaint to include claims relating to the termination and Hawaiian Electric filed its Answer to the Amended Complaint on September 11, 2020, disputing the facts presented by MNEP and all claims within the original and amended complaint.

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 or community support 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 $77.6 million cap on cost recovery as well as a requirement that the Utilities achieve future cost savings consistent with a minimum of $246 million in ERP/EAM project-related benefits to be delivered to customers over the system’s 12-year service life. The decision and order (D&O) approved the deferral of certain project costs and allowed the accrual of AFUDC, but limited the AFUDC rate to 1.75%.

The ERP/EAM Implementation Project went live in October 2018. Hawaii Electric Light and Hawaiian Electric began to incorporate their portion of the deferred project costs in rate base and started the amortization over a 12-year period in January 2020 and November 2020, respectively. As of December 31, 2020, the total deferred project costs and accrued carrying costs after the project went into service amounted to $58.8 million, which is net of the amortization of $1.3 million at Hawaiian Electric and Hawaii Electric Light.

In February 2019, the PUC approved a methodology for passing the future cost saving benefits of the new ERP/EAM system to customers developed by the Utilities in collaboration with the Consumer Advocate. The Utilities filed a benefits clarification document on June 10, 2019, reflecting $150 million in future net O&M expense reductions and cost avoidance, and $96 million in capital cost reductions and tax savings over the 12-year service life. To the extent the reduction in O&M expense relates to amounts reflected in electric rates, the Utilities would reduce future rates for such amounts. In October 2019, the PUC approved the Utilities and the Consumer Advocate’s Stipulated Performance Metrics and Tracking Mechanism. As of December 31, 2020, the Utilities’ regulatory liability was $10.8 million ($6.9 million for Hawaiian Electric, $1.6 million for Hawaii Electric Light and $2.3 million for Maui Electric) for the O&M expense savings included in rates. As part of the settlement agreement approved in the Hawaiian Electric 2020 test year rate case, the regulatory liability for Hawaiian Electric will be amortized over five years, beginning in November 2020, and the O&M benefits for Hawaiian Electric will be considered flowed through to customers. As part of the PBR proceeding, the regulatory liability as of December 31, 2020 for Hawaii Electric Light and Maui Electric will be flowed to customers as part of the customer dividend in the ARA in 2021.

At the PUC’s direction, the Utilities have been filing Semi-Annual Enterprise System Benefits (SAESB) reports. The most recent SAESB report was filed on August 31, 2020 for the period January 1 through June 30, 2020.

West Loch PV Project. In November 2019, Hawaiian Electric placed into service a 20-MW (ac) utility-owned and operated renewable and dispatchable solar facility on property owned by the Department of the Navy. PUC orders resulted in a project cost cap of $67 million (including a cap of $4.7 million for the in-kind work to be performed in exchange for use of the Navy property) with capital cost recovery approved under MPIR (See “Performance-based regulation framework” section below for MPIR guidelines and cost recovery discussion.) Project costs incurred as of December 31, 2020 amounted to $53.3 million and generated $14.7 million and $14.0 million in federal and state nonrefundable tax credits, respectively. For book and regulatory purposes, the tax credits are being deferred and amortized, starting in 2020, over 25 years and 10 years for federal and state credits, respectively.

As part of the approval of the project, a performance guarantee mechanism was established, which calls for the Utilities to provide energy at target annual energy production levels. Production shortfalls are compensated to customers by the amount of shortfall multiplied by the Equivalent Levelized Energy Price (ELEP) based on the revenue requirements of the actual total cost of the project, but not to exceed 9.56 cents/kilowatthours (kWh). Compensations for shortfall are provided to customers as a credit through the PPAC, while production surpluses are refunded to the Utilities up to amount of previously issued underproduction credits. In December 2020, the Utilities accrued $0.6 million in estimated underproduction credits to be returned to customers in 2021 due to not meeting the 2020 annual production target of 46,850 MWh. The 2020 underproduction credit is based on an interim ELEP representing total project costs at December 31, 2020. The credit will be trued up based on a final ELEP based on final project costs.

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 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 federal Environmental Protection Agency (EPA) has since identified environmental impacts in the subsurface soil at the Site. In cooperation with the DOH 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 December 31, 2020, representing the probable and reasonably estimable undiscounted cost for remediation of the Site and the Adjacent Parcel; however, final costs of remediation will depend on the 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 PCBs 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 by the EPA to assess potential sources and extent of PCB contamination onshore at Waiau Power Plant.

As of December 31, 2020, the reserve account balance recorded by Hawaiian Electric to address the PCB contamination was $10 million. The reserve balance represents the probable and reasonably estimable undiscounted cost for the onshore and offshore investigation and remediation. The final remediation costs will depend on the actual onshore and offshore cleanup costs.

Asset retirement obligations.  Asset retirement obligations (AROs) represent legal obligations associated with the retirement of certain tangible long-lived assets, are measured as the present value of the projected costs for the future retirement of specific assets and are recognized in the period in which the liability is incurred if a reasonable estimate of fair value can be made. The Utilities’ recognition of AROs have no impact on their earnings. The cost of the AROs is recovered over the life of the asset through depreciation. AROs recognized by the Utilities relate to legal obligations associated with the retirement of plant and equipment, including removal of asbestos and other hazardous materials.

The Utilities recorded AROs related to: 1) the removal of retired generating units, certain types of transformers and underground storage tanks; 2) the abandonment of fuel pipelines, underground injection and supply wells; and 3) the removal of equipment and restoration of leased land used in connection with Utility-owned renewable and dispatchable generation facilities. 

Changes to the ARO liability included in “Other liabilities” on Hawaiian Electric’s balance sheet were as follows:

(in thousands)			2020						2019
Balance, January 1			$	10,324					$	8,426
Accretion expense			405						312
Liabilities incurred			—						1,594
Liabilities settled			(37)						(8)
Balance, December 31			$	10,692					$	10,324

The Utilities have not recorded AROs for assets that are expected to operate indefinitely or where the Utilities cannot estimate a settlement date (or range of potential settlement dates). As such, ARO liabilities are not recorded for certain asset retirement activities, including various Utilities-owned generating facilities and certain electric transmission, distribution and telecommunications assets resulting from easements over property not owned by the Utilities.

Regulatory proceedings.

Current 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 current 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 kWh sales, (2) rate adjustment mechanism (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.

Performance-based regulation framework. On December 23, 2020, the PUC issued a D&O (PBR D&O) approving a new performance-based regulation framework (PBR Framework). Under the PBR Framework, the Utilities’ current decoupling will continue to be used with modifications, as described below. The existing cost recovery mechanisms will continue as currently implemented (e.g., the Energy Cost Recovery Clause (ECRC), Purchased Power Adjustment Clause (PPAC), Demand Side Management surcharge (DSM), Renewable Energy Infrastructure Program (REIP), Demand Response Adjustment Clause (DRAC), pension and Other Post-Employment Benefits (OPEB) tracking mechanisms). In addition to annual revenues provided by the annual revenue adjustment (ARA), the Utilities may seek relief for extraordinary projects or programs through the Exceptional Project Recovery Mechanism (EPRM) (formerly known as the Major Project Interim Recovery (MPIR) adjustment mechanism) and earn financial rewards for exemplary performance as provided through a portfolio of Performance Incentive Mechanisms (PIMs) and Shared Savings Mechanisms (SSMs). The PBR Framework will incorporate a variety of other performance mechanisms, including Scorecards, Reported Metrics, and an expedited Pilot Process. The PBR Framework also contains a number of safeguards, including a symmetric Earnings Sharing Mechanism (ESM) which protects the Utilities and customers from excessive earnings or losses, as measured by the Utilities’ Return on Equity (ROE) and a Re-Opener mechanism, under which the PUC will open an examination, at its discretion, to determine if adjustments or modifications to specific PBR mechanisms are appropriate.

Rate adjustment mechanism. The existing 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 may be reset upon the issuance of an interim or final decision and order (D&O) in a rate case. All Utilities were limited to the RAM Cap in 2020.

Under the new PBR Framework, the ARA mechanism will replace the RAM, effective on June 1, 2021. The current effective target revenues, which includes the existing RAM, will continue to be in effect for the period from June 1, 2020, through May 31, 2021.

Annual revenue adjustment mechanism. The PBR Framework established a five-year multi-year rate period during which there will be no general rate cases. Target revenues will be adjusted according to an index-driven annual revenue adjustment (ARA) based on (i) an inflation factor, (ii) a predetermined X-factor to encompass productivity, which is set at zero, (iii) a Z-factor to account for exceptional circumstances not in the Utilities’ control and (iv) a customer dividend consisting of a negative adjustment of 0.22% compounded annually and a flow through of the “pre-PBR” savings commitment from the management audit recommendations developed in a prior docket.

As a result of an Order issued by the PUC pursuant to a motion for partial reconsideration the customer dividend for “pre-PBR” savings commitment portion to be delivered to customers will be at a rate of $6.61 million per year from 2021 to 2025,

and the remaining Enterprise Resource Planning system benefits savings of $3.9 million, to be delivered to customers in 2021. The implementation of the ARA is scheduled to occur on June 1, 2021.

Earnings sharing mechanism. A symmetrical earnings sharing mechanism (ESM) for actual return on equity outside of a 300 basis points dead band above and below a target ROE of 9.5%, which is the current authorized ROE for the Utilities. There is a 50/50 sharing between customers and Utilities for the for actual earnings falling within 150 basis points outside of the dead band in either direction, and a 90/10 sharing for any further difference. A Re-opener investigation will be triggered if the Utilities credit rating outlook indicates a potential credit downgrade below investment grade status, or if its earned ROE enters the outer most tier of the ESM.

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.

Projects eligible for recovery through the MPIR adjustment mechanism are major projects (i.e., projects with capital expenditures net of customer contributions in excess of $2.5 million), including, but not restricted to, renewable energy, energy efficiency, utility scale generation, grid modernization and smaller qualifying projects grouped into programs for review. The MPIR adjustment mechanism provides the opportunity to recover revenues for approved costs of eligible projects placed in service between general rate cases wherein cost recovery is limited by a revenue cap and is not provided by other effective recovery mechanisms. The request for PUC approval must include a business case, and all costs that are allowed to be recovered through the MPIR adjustment mechanism must be offset by any related benefits. The guidelines provide for accrual of revenues approved for recovery upon in-service date to be collected from customers through the annual RBA tariff. Capital projects that are not recovered through the MPIR would be included in the RAM and be subject to the RAM Cap, until the next rate case when the Utilities would request recovery in base rates.

The 2019 approved MPIR amounts for Schofield Generating Station of $19.8 million (which accrued effective January 1, 2019), included the 2019 return on project amount (based on the 90% cap on cost recovery of the project through any mechanism other than base rates) in rate base, depreciation and incremental O&M expenses, are collected from June 2020 through May 2021.

The PUC approved the Utilities’ requests for MPIR recovery of the cost of the Grid Modernization Strategy Phase 1 project and West Loch PV project in March and December 2019, respectively. On June 5, 2020, the Utilities submitted 2020 MPIR amounts totaling $23.6 million for the Schofield Generation Station ($19.2 million), West Loch PV project ($3.8 million) and Grid Modernization Strategy Phase 1 project ($0.6 million for all three utilities) for the accrual of revenues effective January 1, 2020, that included the 2020 return on project amount (based on the capped amount) in rate base, depreciation and incremental O&M expenses, for collection from June 2021 through May 2022.

On October 22, 2020, the PUC issued the final D&O in Hawaiian Electric’s 2020 test year rate case approving the parties’ settlement agreement, including the parties’ agreement to remove the 90% cap on cost recovery for the Schofield Generating Station, such that 100% of the allowed project costs will flow through the MPIR mechanism. The 2020 MPIR amounts were revised to reflect the new lower depreciation rates effective January 1, 2020 as approved in the Hawaiian Electric 2020 test year rate case, and for the removal of the 90% cap on cost recovery and revised rate of return effective November 1, 2020.

Exceptional project recovery mechanism. The existing MPIR was renamed EPRM to include deferred and O&M expense projects and to permit the Utilities to include the full amount of approved costs in the EPRM for recovery in the first year the project goes into service, pro-rated for the portion of the year the project is in service. Any pending application for MPIR relief submitted by the Utilities prior to the PBR D&O, will be grandfathered under the MPIR Guidelines.

Performance incentive mechanisms. The PUC has established the following PIMs: (1) Service Quality performance incentives, (2) Phase 1 Request for proposal (RFP) PIM for procurement of low-cost renewable energy, (3) Phase 2 RFP PIMs for generation and generation plus storage project, and Grid Services and standalone storage.

•Service Quality performance incentives (ongoing). 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 $6.8 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 reward is 8 basis points applied to the common equity share of each respective utility’s approved rate base (or maximum penalties or rewards of approximately $1.4 million - in total for the three utilities).

•In December 2019, the Utilities accrued $0.3 million in estimated rewards for call center performance, net of service reliability penalties, for 2019. The net service quality performance rewards related to 2019 will be reflected in the 2020 annual decoupling filing and increased customer rates in the period June 1, 2020 through May 31, 2021.

•In December 2020, the Utilities accrued $0.9 million in estimated rewards for call center performance, net of service reliability penalties, for 2020. The net service quality performance rewards related to 2020 will be reflected in the 2021 annual decoupling filing.

•Phase 1 RFP PIM. Procurement of low-cost variable renewable resources through the request for proposal process in 2018 is 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 kWh for renewable projects with storage capability and 9.5 cents per kWh for energy-only renewable projects. Half of the incentive was earned upon PUC approval of the PPAs and the other half is eligible to be earned in the year following the in-service date of the projects and is dependent on the amount of energy the Utilities receive from the facilities. The total amount of the incentive the Utilities are eligible for is capped at $3.5 million. Based on the seven PPAs approved in 2019, the Utilities recognized $1.7 million in 2019 with the remaining award to be recognized in the year following the in-service date of the projects, which is estimated to occur from 2023-2024.

•Phase 2 RFP PIMs. On October 9, 2019, the PUC issued an order establishing PIMs for the Utilities with regards to the Variable Renewable Dispatchable Generation and Energy Storage RFPs as well as the Delivery of Grid Services via Customer-sited Distributed Energy Resources RFPs that were issued on August 22, 2019 for Oahu, Maui and Hawaii island. The order establishes pricing thresholds, timelines to complete contracting, and other performance criteria for the performance incentive eligibility. The PIMs provide incentives only without penalties. The earliest the Utilities would be eligible for a PIM pursuant to this order is upon PUC approval of executed contracts resulting from the Phase 2 RFPs. The order requires contracts under the Grid Service RFP be filed for approval by May 2020 (subsequently extended to July 9, 2020), and by September 2020 under the Renewable RFPs, with a declining PIM for projects that are not filed by these deadlines. On July 9, 2020, the Utilities filed two Grid Service Purchase Agreements for the Grid Service RFP, which qualify for PIMs, however, details of the incentive metrics will be determined by PUC. On September 15, 2020, the Utilities filed eight power purchase agreements for the Phase 2 RFP. Of those eight, only one project qualified for a potential PIM incentive. The Utilities do not anticipate that any of the remaining projects from the Phase 2 RFP will qualify for PIM. On December 31, 2020, the PUC approved the two Grid Services Purchase Agreements without further clarification regarding the PIM. The Utility has filed a letter to the PUC in January to seek guidance to the next step of defining the details of the incentive metrics.

•The PUC has established the following new PIMs in its PBR D&O. These PIMs are pending development of tariffs.

•Renewable portfolio standard (RPS)-A PIM that provides a financial reward for accelerating the achievement of renewable portfolio standard goals. The Utilities may earn a reward for the amount of system generation above the interpolated statutory RPS goal at $20/MWh in 2021 and 2022, $15/MWh in 2023, and $10/MWh for the remainder of the MRP. Penalties are already prescribed in the RPS as $20/MWh for failing to meet RPS targets in 2030, 2040 and 2045. The evaluation period will commence on January 1, 2021.

•Grid Services Procurement PIM that provides financial rewards for grid services acquired in 2021 and 2022. The Utilities can earn a total maximum reward of $1.5 million over 2021 and 2020. The evaluation period will commence on January 1, 2021.

•Interconnection Approval PIM that provides financial rewards and penalties for interconnection times for distributed energy resources systems <100 kW in size. The Utilities can earn a total annual maximum reward of $3.0 million or a total annual maximum penalty of $0.9 million. The evaluation period will commence on January 1, 2021.

•Low-to-Moderate Income (LMI) Energy Efficiency PIM that provides financial rewards for collaboration between the Utilities and the third-party Public Benefits Fee Administrator to deliver energy savings for low- and moderate-income customers. The rewards for the PIM metrics will be collectively capped at $2.0 million. The PIM will initially have a duration of three years and be subject to an annual review. The evaluation period will commence as of the date of the effective tariff.

•Advanced Metering Infrastructure (AMI) Utilization PIM that provides financial rewards for acceleration of the number of customers with advanced meters enabled to support time-varying rates and next generation distributed energy resources programs. The Utilities can earn a total annual maximum reward of $2.0 million. The evaluation period will commence as of the date of the effective tariff.

Annual decoupling filings. The net annual incremental amounts to be collected (refunded) from June 1, 2020 through May 31, 2021 are as follows:

(in millions)						Hawaiian Electric						Hawaii Electric Light						Maui Electric						Total
2020 Annual incremental RAM adjusted revenues						$	20.6					$	3.2					$	5.7					$	29.5
Annual change in accrued RBA balance as of December 31, 2019 (and associated revenue taxes) which incorporates MPIR recovery						(46.5)						(9.9)						(11.0)						(67.4)
Incremental Performance Incentive Mechanisms (net)						2.2						(0.1)						(0.1)						2.0
Net annual incremental amount to be refunded under the tariffs						$	(23.7)					$	(6.8)					$	(5.4)					$	(35.9)

Most recent rate proceedings.

Hawaiian Electric 2020 test year rate case. On May 27, 2020, Hawaiian Electric and the Consumer Advocate filed a Stipulated Settlement Letter, documenting a global settlement of all issues in this rate case. The Parties agreed that as a result of this settlement agreement, there will be no increase in electric revenues over the revenues established in the 2017 test year rate case.

On May 13, 2020, the PUC issued its Final Report on the Management Audit, which recommended various operational and organizational changes intended to better manage costs and provide value to customers. The report also recommended a three-year timeframe to ramp up to a sustained $25 million in annual savings by the end of 2022, split between capital (approximately 80%) and O&M (approximately 20%). In its statement of position on the management audit filed on June 17, 2020, Hawaiian Electric committed to deliver these savings to customers over time through a proposal it later submitted in its statement of position in the PBR proceeding.

On October 22, 2020, the PUC issued a final D&O approving the stipulated settlement agreement filed in the proceeding. As a result, there will be no increase in base electric rates established in the 2017 test year rate case. In the final D&O, the PUC approved the capital structure that consists of a 58% total equity ratio, and a ROACE of 9.5% for the 2020 test year. The resulting return on rate base (RORB) is 7.37%. The D&O approved the agreement to implement the overall lower depreciation rates approved in the last depreciation study proceeding, effective January 1, 2020. See “Annual revenue adjustment mechanism” under “Performance-based regulation framework” above, regarding the PUC’s decision on the treatment of Hawaiian Electric’s Management Audit savings commitment. Hawaiian Electric’s proposed RBA provision tariff and ECRC tariff submitted on November 6, 2020 were approved by the PUC on December 11, 2020 and took effect on January 1, 2021.

Hawaii Electric Light 2019 test year rate case. On November 13, 2019, the PUC issued an interim decision maintaining Hawaii Electric Light’s revenues at current effective rates based on an interim revenue requirement of $387 million, average rate base of $534 million, and a 7.52% RORB that incorporates a ROACE of 9.5% and 58.0% total equity ratio, and tariffs became effective January 1, 2020. On July 28, 2020, the PUC issued a final D&O, approving the Stipulated Partial Settlement Letter in part and ordering final rates for the 2019 test year to remain at current effective rates such that there is a zero increase in rates. The PUC determined that an appropriate ROACE for the 2019 test year is 9.5%, approved a capital structure of 58% total equity and approved as fair a 7.52% RORB. In addition, the order, among others, (1) approved a 10-year amortization period for the state investment tax credit; and (2) approved a modification to Hawaii Electric Light’s ECRC to incorporate a 98%/2% risk-sharing split between customers and Hawaii Electric Light with an annual maximum exposure cap of +/- $600,000. The proposed final tariffs and PIM tariffs took effect on November 1, 2020, and the ECRC tariff became effective on January 1, 2021.

Regulatory assets for COVID-19 related costs. On May 4, 2020, the PUC issued an order, authorizing all utilities, including the Utilities, to establish regulatory assets to record costs resulting from the suspension of disconnections of service during the pendency of the Governor’s Emergency Proclamation and until otherwise ordered by the PUC. In future proceedings, the PUC will consider the reasonableness of the costs, the appropriate period of recovery, any amount of carrying costs thereon, and any savings directly attributable to suspension of disconnects, and other related matters. As part of the order, the PUC prohibits the Utilities from charging late payment fees on past due payments. On June 30, 2020, the PUC issued an order approving the Utilities’ request made in April 2020 for deferral treatment of COVID-19 related costs through December 31, 2020. The Utilities requested to extend the deferral period to June 30, 2021, which is pending the PUC’s approval. The Utilities are required to file quarterly reports to update the Utilities’ financial condition, report measures in place to assist their customers during the COVID-19 emergency situation, identify the planned deferred costs and details for the deferred costs, and identify funds received or benefits received that have resulted from the COVID-19 emergency period. The recovery of the regulatory

assets would be determined in a subsequent proceeding and management believes the deferred costs are probable of recovery. As of December 31, 2020, the Utilities recorded a total of $18 million in regulatory assets pursuant to the orders.

Consolidating financial information. Consolidating financial information for Hawaiian Electric and its subsidiaries are presented for the years ended December 31, 2020, 2019 and 2018, and as of December 31, 2020 and 2019.

Hawaiian Electric 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 and (b) under their respective private placement note agreements and the Hawaii Electric Light notes and Maui Electric notes issued thereunder (see Hawaiian Electric and Subsidiaries’ Consolidated Statements of Capitalization). 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.

Consolidating statement of income

Year ended December 31, 2020

(in thousands)			Hawaiian Electric						Hawaii Electric Light						Maui Electric						Other subsidiaries						Consolidating adjustments									Hawaiian Electric Consolidated
Revenues			$	1,608,305					334,221						323,430						—						(636)			[1]						$	2,265,320
Expenses
Fuel oil			354,087						72,202						88,985						—						—									515,274
Purchased power			446,672						73,120						48,957						—						—									568,749
Other operation and maintenance			311,781						73,746						88,665						—						—									474,192
Depreciation			151,387						39,041						32,305						—						—									222,733
Taxes, other than income taxes			154,191						31,181						30,450						—						—									215,822
Total expenses			1,418,118						289,290						289,362						—						—									1,996,770
Operating income			190,187						44,931						34,068						—						(636)									268,550
Allowance for equity funds used during construction			7,335						543						890						—						—									8,768
Equity in earnings of subsidiaries			47,504						—						—						—						(47,504)			[2]						—
Retirement defined benefits expense—other than service costs			(1,294)						672						(141)						—						—									(763)
Interest expense and other charges, net			(48,775)						(10,004)						(9,651)						—						636			[1]						(67,794)
Allowance for borrowed funds used during construction			2,540						160						292						—						—									2,992
Income before income taxes			197,497						36,302						25,458						—						(47,504)									211,753
Income taxes			27,077						8,275						5,066						—						—									40,418
Net income			170,420						28,027						20,392						—						(47,504)									171,335
Preferred stock dividends of subsidiaries			—						534						381						—						—									915
Net income attributable to Hawaiian Electric			170,420						27,493						20,011						—						(47,504)									170,420
Preferred stock dividends of Hawaiian Electric			1,080						—						—						—						—									1,080
Net income for common stock			$	169,340					$	27,493					$	20,011					$	—					$	(47,504)								$	169,340

Consolidating statement of comprehensive income

Year ended December 31, 2020

(in thousands)			Hawaiian Electric						Hawaii Electric Light						Maui Electric						Other subsidiaries						Consolidating adjustments									Hawaiian Electric Consolidated
Net income for common stock			$	169,340					27,493						20,011						—						(47,504)									$	169,340
Other comprehensive income (loss), net of taxes:
Retirement benefit plans:
Net losses arising during the period, net of tax benefits			(63,050)						(9,424)						(10,897)						—						20,321			[1]						(63,050)
Adjustment for amortization of prior service credit and net losses recognized during the period in net periodic benefit cost, net of tax benefits			21,550						3,179						2,763						—						(5,942)			[1]						21,550
Reclassification adjustment for impact of D&Os of the PUC included in regulatory assets, net of taxes			39,860						6,025						8,000						—						(14,025)			[1]						39,860
Other comprehensive loss, net of tax benefits			(1,640)						(220)						(134)						—						354									(1,640)
Comprehensive income attributable to common shareholder			$	167,700					27,273						19,877						—						(47,150)									$	167,700

Consolidating statement of income

Year ended December 31, 2019

(in thousands)			Hawaiian Electric						Hawaii Electric Light						Maui Electric						Other subsidiaries						Consolidating adjustments									Hawaiian Electric Consolidated
Revenues			$	1,803,698					364,590						378,202						—						(548)			[1]						$	2,545,942
Expenses
Fuel oil			494,728						84,565						141,416						—						—									720,709
Purchased power			494,215						90,989						48,052						—						—									633,256
Other operation and maintenance			319,771						76,091						85,875						—						—									481,737
Depreciation			143,470						41,812						30,449						—						—									215,731
Taxes, other than income taxes			170,979						33,787						35,365						—						—									240,131
Total expenses			1,623,163						327,244						341,157						—						—									2,291,564
Operating income			180,535						37,346						37,045						—						(548)									254,378
Allowance for equity funds used    during construction			9,955						816						1,216						—						—									11,987
Equity in earnings of subsidiaries			43,167						—						—						—						(43,167)			[2]						—
Retirement defined benefits expense—other than service costs			(2,287)						(422)						(127)						—						—									(2,836)
Interest expense and other charges, net			(51,199)						(10,741)						(9,450)						—						548			[1]						(70,842)
Allowance for borrowed funds used during construction			3,666						342						445						—						—									4,453
Income before income taxes			183,837						27,341						29,129						—						(43,167)									197,140
Income taxes			25,917						5,990						6,398						—						—									38,305
Net income			157,920						21,351						22,731						—						(43,167)									158,835
Preferred stock dividends of subsidiaries			—						534						381						—						—									915
Net income attributable to Hawaiian Electric			157,920						20,817						22,350						—						(43,167)									157,920
Preferred stock dividends of Hawaiian Electric			1,080						—						—						—						—									1,080
Net income for common stock			$	156,840					$	20,817					$	22,350					—						(43,167)									$	156,840

Consolidating statement of comprehensive income

Year ended December 31, 2019

(in thousands)			Hawaiian Electric						Hawaii Electric Light						Maui Electric						Other subsidiaries						Consolidating adjustments									Hawaiian Electric Consolidated
Net income for common stock			$	156,840					20,817						22,350						—						(43,167)									$	156,840
Other comprehensive income (loss), net of taxes:
Retirement benefit plans:
Net gains (losses) arising during the period, net of taxes			5,249						373						(204)						—						(169)			[1]						5,249
Adjustment for amortization of prior service credit and net losses recognized during the period in net periodic benefit cost, net of tax benefits			9,550						1,455						1,182						—						(2,637)			[1]						9,550
Reclassification adjustment for impact of D&Os of the PUC included in regulatory assets, net of taxes			(16,177)						(1,840)						(1,152)						—						2,992			[1]						(16,177)
Other comprehensive loss, net of tax benefits			(1,378)						(12)						(174)						—						186									(1,378)
Comprehensive income attributable to common shareholder			$	155,462					20,805						22,176						—						(42,981)									$	155,462

Consolidating statement of income

Year ended December 31, 2018

(in thousands)			Hawaiian Electric						Hawaii Electric Light						Maui Electric						Other subsidiaries						Consolidating adjustments									Hawaiian Electric Consolidated
Revenues			$	1,802,550					375,493						368,700						—						(218)			[1]						$	2,546,525
Expenses
Fuel oil			523,706						90,792						146,030						—						—									760,528
Purchased power			494,450						95,838						49,019						—						—									639,307
Other operation and maintenance			313,346						70,396						77,749						—						—									461,491
Depreciation			137,410						40,235						25,981						—						—									203,626
Taxes, other than income taxes			170,363						34,850						34,699						—						—									239,912
Total expenses			1,639,275						332,111						333,478						—						—									2,304,864
Operating income			163,275						43,382						35,222						—						(218)									241,661
Allowance for equity funds used    during construction			9,208						478						1,191						—						—									10,877
Equity in earnings of subsidiaries			45,393						—						—						—						(45,393)			[2]						—
Retirement defined benefits expense—other than service costs			(2,649)						(417)						(565)						—						—									(3,631)
Interest expense and other charges, net			(52,180)						(11,836)						(9,550)						—						218			[1]						(73,348)
Allowance for borrowed funds used during construction			4,019						276						572						—						—									4,867
Income before income taxes			167,066						31,883						26,870						—						(45,393)									180,426
Income taxes			22,333						6,868						5,577						—						—									34,778
Net income			144,733						25,015						21,293						—						(45,393)									145,648
Preferred stock dividends of subsidiaries			—						534						381						—						—									915
Net income attributable to Hawaiian Electric			144,733						24,481						20,912						—						(45,393)									144,733
Preferred stock dividends of Hawaiian Electric			1,080						—						—						—						—									1,080
Net income for common stock			$	143,653					24,481						20,912						—						(45,393)									$	143,653

Consolidating statement of comprehensive income

Year ended December 31, 2018

(in thousands)			Hawaiian Electric						Hawaii Electric Light						Maui Electric						Other subsidiaries						Consolidating adjustments									Hawaiian Electric Consolidated
Net income for common stock			$	143,653					24,481						20,912						—						(45,393)									$	143,653
Other comprehensive income (loss), net of taxes:
Retirement benefit plans:
Net losses arising during the period, net of tax benefits			(26,019)						(6,090)						(5,004)						—						11,094			[1]						(26,019)
Adjustment for amortization of prior service credit and net losses recognized during the period in net periodic benefit cost, net of tax benefits			19,012						2,819						2,423						—						(5,242)			[1]						19,012
Reclassification adjustment for impact of D&Os of the PUC included in regulatory assets, net of taxes			8,325						3,305						2,788						—						(6,093)			[1]						8,325
Other comprehensive income, net of taxes			1,318						34						207						—						(241)									1,318
Comprehensive income attributable to common shareholder			$	144,971					24,515						21,119						—						(45,634)									$	144,971

Consolidating balance sheet

December 31, 2020

(in thousands)			Hawaiian Electric						Hawaii Electric Light						Maui Electric						Other subsidiaries						Consolidating adjustments									Hawaiian Electric Consolidated
Assets
Property, plant and equipment
Utility property, plant and equipment
Land			$	42,411					5,606						3,594						—						—									$	51,611
Plant and equipment			4,960,470						1,352,885						1,195,988						—						—									7,509,343
Less accumulated depreciation			(1,677,256)						(597,606)						(544,217)						—						—									(2,819,079)
Construction in progress			143,616						13,043						31,683						—						—									188,342
Utility property, plant and equipment, net			3,469,241						773,928						687,048						—						—									4,930,217
Nonutility property, plant and equipment, less accumulated depreciation			5,306						115						1,532						—						—									6,953
Total property, plant and equipment, net			3,474,547						774,043						688,580						—						—									4,937,170
Investment in wholly-owned subsidiaries, at equity			626,890						—						—						—						(626,890)			[2]						—
Current assets
Cash and cash equivalents			42,205						3,046						2,032						77						—									47,360
Restricted cash			15,966						—						—						—						—									15,966
Advances to affiliates			26,700						—						—						—						(26,700)			[1]						—
Customer accounts receivable, net			102,736						23,989						21,107						—						—									147,832
Accrued unbilled revenues, net			73,628						13,631						13,777						—						—									101,036
Other accounts receivable, net			17,984						3,028						2,856						—						(16,195)			[1]						7,673
Fuel oil stock, at average cost			38,777						8,471						10,990						—						—									58,238
Materials and supplies, at average cost			38,786						9,896						18,662						—						—									67,344
Prepayments and other			34,306						5,197						4,580						—						—									44,083
Regulatory assets			22,095						1,954						6,386						—						—									30,435
Total current assets			413,183						69,212						80,390						77						(42,895)									519,967
Other long-term assets
Operating lease right-of-use assets			125,858						1,443						353						—						—									127,654
Regulatory assets			513,192						114,461						108,620						—						—									736,273
Other			98,307						17,992						20,010						—						—									136,309
Total other long-term assets			737,357						133,896						128,983						—						—									1,000,236
Total assets			$	5,251,977					977,151						897,953						77						(669,785)									$	6,457,373
Capitalization and liabilities
Capitalization
Common stock equity			$	2,141,918					317,451						309,363						77						(626,891)			[2]						$	2,141,918
Cumulative preferred stock–not subject to mandatory redemption			22,293						7,000						5,000						—						—									34,293
Long-term debt, net			1,116,426						216,447						228,429						—						—									1,561,302
Total capitalization			3,280,637						540,898						542,792						77						(626,891)									3,737,513
Current liabilities
Current portion of operating lease liabilities			64,599						98						33						—						—									64,730
Short-term borrowings-non-affiliate			49,979						—						—						—						—									49,979
Short-term borrowings-affiliate			—						18,800						7,900						—						(26,700)			[1]						—
Accounts payable			97,102						19,570						17,177						—						—									133,849
Interest and preferred dividends payable			14,480						3,138						2,790						—						(58)			[1]						20,350
Taxes accrued			135,018						29,869						27,637						—						—									192,524
Regulatory liabilities			20,224						8,785						8,292						—						—									37,301
Other			57,926						13,851						18,621						—						(16,136)			[1]						74,262
Total current liabilities			439,328						94,111						82,450						—						(42,894)									572,995
Deferred credits and other liabilities
Operating lease liabilities			67,824						1,344						326						—						—									69,494
Deferred income taxes			282,685						54,108						61,005						—						—									397,798
Regulatory liabilities			656,270						173,938						92,277						—						—									922,485
Unamortized tax credits			82,563						15,363						13,989						—						—									111,915
Defined benefit pension and other postretirement benefit plans liability			373,112						77,679						79,741						—						—									530,532
Other			69,558						19,710						25,373						—						—									114,641
Total deferred credits and other liabilities			1,532,012						342,142						272,711						—						—									2,146,865
Total capitalization and liabilities			$	5,251,977					977,151						897,953						77						(669,785)									$	6,457,373

Consolidating balance sheet

December 31, 2019

(in thousands)			Hawaiian Electric						Hawaii Electric Light						Maui Electric						Other subsidiaries						Consolidating adjustments									Hawaiian Electric Consolidated
Assets
Property, plant and equipment
Utility property, plant and equipment
Land			$	42,598					5,606						3,612						—						—									$	51,816
Plant and equipment			4,765,362						1,313,727						1,161,199						—						—									7,240,288
Less accumulated depreciation			(1,591,241)						(574,615)						(524,301)						—						—									(2,690,157)
Construction in progress			165,137						9,993						17,944						—						—									193,074
Utility property, plant and equipment, net			3,381,856						754,711						658,454						—						—									4,795,021
Nonutility property, plant and equipment, less accumulated depreciation			5,310						114						1,532						—						—									6,956
Total property, plant and equipment, net			3,387,166						754,825						659,986						—						—									4,801,977
Investment in wholly-owned subsidiaries, at equity			591,969						—						—						—						(591,969)			[2]						—
Current assets
Cash and cash equivalents			2,239						6,885						1,797						101						—									11,022
Restricted cash			30,749						123						—						—						—									30,872
Advances to affiliates			27,700						8,000						—						—						(35,700)			[1]						—
Customer accounts receivable, net			105,454						24,520						22,816						—						—									152,790
Accrued unbilled revenues, net			83,148						17,071						17,008						—						—									117,227
Other accounts receivable, net			18,396						1,907						1,960						—						(10,695)			[1]						11,568
Fuel oil stock, at average cost			69,003						8,901						14,033						—						—									91,937
Materials and supplies, at average cost			34,876						8,313						17,513						—						—									60,702
Prepayments and other			88,334						3,725						24,921						—						—									116,980
Regulatory assets			27,689						1,641						1,380						—						—									30,710
Total current assets			487,588						81,086						101,428						101						(46,395)									623,808
Other long-term assets
Operating lease right-of-use assets			174,886						1,537						386						—						—									176,809
Regulatory assets			476,390						109,163						98,817						—						—									684,370
Other			69,010						15,493						17,215						—						—									101,718
Total other long-term assets			720,286						126,193						116,418						—						—									962,897
Total assets			$	5,187,009					962,104						877,832						101						(638,364)									$	6,388,682
Capitalization and liabilities
Capitalization
Common stock equity			$	2,047,352					298,998						292,870						101						(591,969)			[2]						$	2,047,352
Cumulative preferred stock–not subject to mandatory redemption			22,293						7,000						5,000						—						—									34,293
Long-term debt, net			1,006,737						206,416						188,561						—						—									1,401,714
Total capitalization			3,076,382						512,414						486,431						101						(591,969)									3,483,359
Current liabilities
Current portion of operating lease liabilities			63,582						94						31						—						—									63,707
Current portion of long-term debt			61,958						13,995						20,000						—						—									95,953
Short-term borrowings-non-affiliate			88,987						—						—						—						—									88,987
Short-term borrowings-affiliate			8,000						—						27,700						—						(35,700)			[1]						—
Accounts payable			139,056						25,629						23,085						—						—									187,770
Interest and preferred dividends payable			14,759						3,115						2,900						—						(46)			[1]						20,728
Taxes accrued			143,522						32,541						31,929						—						—									207,992
Regulatory liabilities			13,363						9,454						7,907						—						—									30,724
Other			51,295						11,362						15,297						—						(10,649)			[1]						67,305
Total current liabilities			584,522						96,190						128,849						—						(46,395)									763,166
Deferred credits and other liabilities
Operating lease liabilities			111,598						1,442						360						—						—									113,400
Deferred income taxes			265,864						53,534						57,752						—						—									377,150
Regulatory liabilities			664,894						178,474						98,218						—						—									941,586
Unamortized tax credits			86,852						16,196						14,820						—						—									117,868
Defined benefit pension and other postretirement benefit plans liability			339,471						69,928						69,364						—						—									478,763
Other			57,426						33,926						22,038						—						—									113,390
Total deferred credits and other liabilities			1,526,105						353,500						262,552						—						—									2,142,157
Total capitalization and liabilities			$	5,187,009					962,104						877,832						101						(638,364)									$	6,388,682

Consolidating statements of changes in common stock equity

(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			143,653						24,481						20,912						—						(45,393)						143,653
Other comprehensive income, net of taxes			1,318						34						207						—						(241)						1,318
Issuance of common stock, net of expenses			70,692						1						1,498						—						(1,499)						70,692
Common stock dividends			(103,305)						(15,289)						(12,019)						—						27,308						(103,305)
Balance, December 31, 2018			1,957,641						295,874						280,863						101						(576,838)						1,957,641
Net income for common stock			156,840						20,817						22,350						—						(43,167)						156,840
Other comprehensive loss, net of tax benefits			(1,378)						(12)						(174)						—						186						(1,378)
Issuance of common stock, net of expenses			35,501						(1)						4,899						—						(4,898)						35,501
Common stock dividends			(101,252)						(17,680)						(15,068)						—						32,748						(101,252)
Balance, December 31, 2019			2,047,352						298,998						292,870						101						(591,969)						2,047,352
Net income for common stock			169,340						27,493						20,011						—						(47,504)						169,340
Other comprehensive loss, net of tax benefits			(1,640)						(220)						(134)						—						354						(1,640)
Issuance of common stock, net of expenses			34,000						7,500						11,000						—						(18,500)						34,000
Common stock dividends			(107,134)						(16,320)						(14,384)						—						30,704						(107,134)
Dissolution of subsidiary			—						—						—						(24)						24						—
Balance, December 31, 2020			$	2,141,918					317,451						309,363						77						(626,891)						$	2,141,918

Consolidating statement of cash flows

Year ended December 31, 2020

(in thousands)			Hawaiian Electric						Hawaii Electric Light						Maui Electric						Other subsidiaries						Consolidating adjustments									Hawaiian Electric Consolidated
Cash flows from operating activities
Net income			$	170,420					28,027						20,392						—						(47,504)			[2]						$	171,335
Adjustments to reconcile net income to net cash provided by operating activities
Equity in earnings of subsidiaries			(47,504)						—						—						—						47,504			[2]						—
Common stock dividends received from subsidiaries			30,704						—						—						—						(30,704)			[2]						—
Depreciation of property, plant and equipment			151,387						39,041						32,305						—						—									222,733
Other amortization			24,511						5,090						4,145						—						—									33,746
Deferred income taxes			2,130						(463)						1,484						—						—									3,151
State refundable credit			(6,668)						(1,593)						(1,700)						—						—									(9,961)
Bad debt expense			1,042						620						453						—						—									2,115
Allowance for equity funds used during construction			(7,335)						(543)						(890)						—						—									(8,768)
Accrued environmental reserve			6,556						—						—						—						—									6,556
Other			1,201						1,322						87						—						—									2,610
Changes in assets and liabilities:
Increase in accounts receivable			(8,093)						(3,349)						(1,343)						—						5,499			[1]						(7,286)
Decrease in accrued unbilled revenues			8,832						3,327						3,126						—						—									15,285
Decrease in fuel oil stock			30,226						430						3,043						—						—									33,699
Increase in materials and supplies			(3,910)						(1,583)						(1,149)						—						—									(6,642)
Decrease (increase) in regulatory assets			8,526						(2,908)						(4,611)						—						—									1,007
Decrease in regulatory liabilities			(5,490)						(4,489)						(6,583)																					(16,562)
Decrease in accounts payable			(26,093)						(1,819)						(5,217)						—						—									(33,129)
Change in prepaid and accrued income taxes, tax credits and revenue taxes			(25,757)						(5,483)						(5,998)						—						58			[1]						(37,180)
Decrease in defined benefit pension and other postretirement benefit plans liability			(3,092)						(643)						(571)						—						—									(4,306)
Change in other assets and liabilities			(21,124)						(8,864)						3,635						—						(5,499)			[1]						(31,852)
Net cash provided by operating activities			280,469						46,120						40,608						—						(30,646)									336,551
Cash flows from investing activities
Capital expenditures			(229,127)						(64,346)						(57,391)						—						—									(350,864)
Advances from affiliates			1,000						8,000						—						—						(9,000)			[1]						—
Other			(14,340)						1,032						960						(24)						18,442			[1],[2]						6,070
Net cash used in investing activities			(242,467)						(55,314)						(56,431)						(24)						9,442									(344,794)
Cash flows from financing activities
Common stock dividends			(107,134)						(16,320)						(14,384)						—						30,704			[2]						(107,134)
Preferred stock dividends of Hawaiian Electric and subsidiaries			(1,080)						(534)						(381)						—						—									(1,995)
Proceeds from issuance of common stock			34,000						7,500						11,000						—						(18,500)			[2]						34,000
Proceeds from issuance of long-term debt			205,000						10,000						40,000						—						—									255,000
Repayment of long-term debt			(95,000)						(14,000)						—						—						—									(109,000)
Net increase (decrease) in short-term borrowings from non-affiliates and affiliate with original maturities of three months or less			(46,987)						18,800						(19,800)						—						9,000			[1]						(38,987)
Proceeds from issuance of short-term debt			100,000						—						—						—						—									100,000
Repayment of short-term debt			(100,000)						—						—						—						—									(100,000)
Other			(1,618)						(214)						(377)						—						—									(2,209)
Net cash provided by (used in) financing activities			(12,819)						5,232						16,058						—						21,204									29,675
Net increase (decrease) in cash, cash equivalents and restricted cash			25,183						(3,962)						235						(24)						—									21,432
Cash, cash equivalents and restricted cash, January 1			32,988						7,008						1,797						101						—									41,894
Cash, cash equivalents and restricted cash, December 31			58,171						3,046						2,032						77						—									63,326
Less: Restricted cash			(15,966)						—						—						—						—									(15,966)
Cash and cash equivalents, December 31			42,205						3,046						2,032						77						—									$	47,360

Consolidating statement of cash flows

Year ended December 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			$	157,920					21,351						22,731						—						(43,167)			[2]						$	158,835
Adjustments to reconcile net income to net cash provided by operating activities
Equity in earnings of subsidiaries			(43,204)						—						—						—						43,167			[2]						(37)
Common stock dividends received from subsidiaries			32,783						—						—						—						(32,748)			[2]						35
Depreciation of property, plant and equipment			143,470						41,812						30,449						—						—									215,731
Other amortization			23,351						4,810						1,470						—						—									29,631
Deferred income taxes			(13,547)						(2,383)						(354)						—						—									(16,284)
State refundable credit			(6,245)						(559)						(1,565)						—						—									(8,369)
Bad debt expense			1,236						470						444						—						—									2,150
Allowance for equity funds used during construction			(9,955)						(816)						(1,216)						—						—									(11,987)
Accrued environmental reserve			406						—						—						—						—									406
Other			27,575						(61)						(55)						—						—									27,459
Changes in assets and liabilities:
Decrease in accounts receivable			24,150						2,858						3,029						—						(11,215)			[1]						18,822
Decrease (increase) in accrued unbilled revenues			4,902						(22)						(385)						—						—									4,495
Decrease (increase) in fuel oil stock			(14,741)						2,126						613						—						—									(12,002)
Decrease (increase) in materials and supplies			(4,585)						(1,158)						245						—						—									(5,498)
Decrease in regulatory assets			55,494						9,218						6,550						—						—									71,262
Increase (decrease) in regulatory liabilities			102						(1,558)						3,409																					1,953
Increase (decrease) in accounts payable			4,687						(3,160)						(3,578)						—						—									(2,051)
Change in prepaid and accrued income taxes, tax credits and revenue taxes			(24,900)						(893)						(3,097)						—						367			[1]						(28,523)
Decrease in defined benefit pension and other postretirement benefit plans liability			(3,033)						(762)						(653)						—						—									(4,448)
Change in other assets and liabilities			(15,747)						(6,152)						(6,940)						—						11,215			[1]						(17,624)
Net cash provided by operating activities			340,119						65,121						51,097						—						(32,381)									423,956
Cash flows from investing activities
Capital expenditures			(311,538)						(49,811)						(58,549)						—						—									(419,898)
Advances to affiliates			(27,700)						(8,000)						—						—						35,700			[1]						—
Other			5,241						297						1,303						—						4,533			[1],[2]						11,374
Net cash used in investing activities			(333,997)						(57,514)						(57,246)						—						40,233									(408,524)
Cash flows from financing activities
Common stock dividends			(101,252)						(17,680)						(15,068)						—						32,748			[2]						(101,252)
Preferred stock dividends of Hawaiian Electric and subsidiaries			(1,080)						(534)						(381)						—						—									(1,995)
Proceeds from the issuance of common stock			35,500						—						4,900						—						(4,900)			[2]						35,500
Proceeds from the issuance of long-term debt			190,000						72,500						17,500						—						—									280,000
Repayment of long-term debt and funds transferred for repayment of long-term dent			(183,546)						(70,000)						(30,000)						—						—									(283,546)
Net increase in short-term borrowings from non-affiliates and affiliate with original maturities of three months or less			46,987						—						27,700						—						(35,700)			[1]						38,987
Proceeds from issuance of short-term debt			75,000						—						—						—						—									75,000
Repayment of short-term debt			(50,000)						—						—						—						—									(50,000)
Other			(1,475)						(508)						(126)						—						—									(2,109)
Net cash provided by (used in) financing activities			10,134						(16,222)						4,525						—						(7,852)									(9,415)
Net increase (decrease) in cash, cash equivalents and restricted cash			16,256						(8,615)						(1,624)						—						—									6,017
Cash, cash equivalents and restricted cash, January 1			16,732						15,623						3,421						101						—									35,877
Cash, cash equivalents and restricted cash, December 31			32,988						7,008						1,797						101						—									41,894
Less: Restricted cash			(30,749)						(123)						—						—						—									(30,872)
Cash and cash equivalents, December 31			$	2,239					6,885						1,797						101						—									$	11,022

Consolidating statement of cash flows

Year ended December 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			$	144,733					25,015						21,293						—						(45,393)			[2]						$	145,648
Adjustments to reconcile net income to net cash provided by operating activities
Equity in earnings of subsidiaries			(45,493)						—						—						—						45,393			[2]						(100)
Common stock dividends received from subsidiaries			27,408						—						—						—						(27,308)			[2]						100
Depreciation of property, plant and equipment			137,410						40,235						25,981						—						—									203,626
Other amortization			20,956						5,069						577						—						—									26,602
Deferred income taxes			(9,806)						(341)						2,165						—						—									(7,982)
State refundable credit			(4,941)						(547)						(751)						—						—									(6,239)
Bad debt expense			1,388						600						217						—						—									2,205
Allowance for equity funds used during construction			(9,208)						(478)						(1,191)						—						—									(10,877)
Accrued environmental reserve			273						—						—						—						—									273
Other			3,908						334						427						—						—									4,669
Changes in assets and liabilities:
Increase in accounts receivable			(53,020)						(5,457)						(8,829)						—						14,220			[1]						(53,086)
Increase in accrued unbilled revenues			(10,908)						(1,121)						(2,691)						—						—									(14,720)
Decrease (increase) in fuel oil stock			10,710						(2,329)						(1,443)						—						—									6,938
Decrease (increase) in materials and supplies			(1,966)						886						273						—						—									(807)
Decrease (increase) in regulatory assets			12,192						71						(3,011)						—						—									9,252
Increase in regulatory liabilities			26,540						5,380						5,438						—						—									37,358
Increase in accounts payable			14,748						6,104						3,506						—						—									24,358
Change in prepaid and accrued income taxes, tax credits and revenue taxes			24,438						(2,118)						3,047						—						(331)			[1]						25,036
Increase (decrease) in defined benefit pension and other postretirement benefit plans liability			17,178						(760)						2,328						—						—									18,746
Change in other assets and liabilities			(8,329)						2,806						2,356						—						(14,220)			[1]						(17,387)
Net cash provided by operating activities			298,211						73,349						49,692						—						(27,639)									393,613
Cash flows from investing activities
Capital expenditures			(305,703)						(51,054)						(58,507)						—						—									(415,264)
Advances from affiliates			—						—						12,000						—						(12,000)			[1]						—
Other			3,226						1,182						3,843						—						1,831			[1],[2]						10,082
Net cash used in investing activities			(302,477)						(49,872)						(42,664)						—						(10,169)									(405,182)
Cash flows from financing activities
Common stock dividends			(103,305)						(15,289)						(12,019)						—						27,308			[2]						(103,305)
Preferred stock dividends of Hawaiian Electric and subsidiaries			(1,080)						(534)						(381)						—						—									(1,995)
Proceeds from the issuance of common stock			70,700						—						1,500						—						(1,500)			[2]						70,700
Proceeds from the issuance of long-term debt			75,000						15,000						10,000						—						—									100,000
Repayment of long-term debt			(30,000)						(11,000)						(9,000)						—						—									(50,000)
Net decrease in short-term borrowings from non-affiliates and affiliate with original maturities of three months or less			(16,999)						—						—						—						12,000			[1]						(4,999)
Proceeds from issuance of short-term debt			25,000						—						—						—						—									25,000
Other			(377)						(56)						(39)						—						—									(472)
Net cash provided by (used in) financing activities			18,939						(11,879)						(9,939)						—						37,808									34,929
Net increase (decrease) in cash and cash equivalents			14,673						11,598						(2,911)						—						—									23,360
Cash and cash equivalents, January 1			2,059						4,025						6,332						101						—									12,517
Cash and cash equivalents, December 31			$	16,732					15,623						3,421						101						—									$	35,877

Explanation of consolidating adjustments on consolidating schedules:

[1]Eliminations of intercompany receivables and payables and other intercompany transactions.

[2]Elimination of investment in subsidiaries, carried at equity.

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