HAWAIIAN ELECTRIC CO INC

Electric utility

Recent developments. See also “Recent developments” in HEI’s MD&A and Note 2 of the Condensed Consolidated Financial Statements, which includes disclosures relating to Maui windstorm and wildfires.

For the second quarter of 2026, the Utilities generated net income of approximately $137.9 million compared to $39.2 million for the same quarter of 2025. See “Results of operations” below for variance explanations.

In thesecond quarter of 2026, kWh sales volume decreased 0.8% compared to the same period in 2025. The decrease is driven by cooler weather conditions.

The price of crude oil has increased 51.9% over the same quarter in the prior year. The Utilities are able to pass through fuel costs to customers and have limited fuel cost exposure through a 2% fuel cost-risk sharing mechanism (approximately $3.7 million maximum penalty/reward exposure annually). However, the Utilities expect cash flow impacts from the timing of the disbursements for fuel inventories and subsequent collection of accounts receivable, resulting in higher working capital requirements.

In June 2026, the Consumer Price Index (CPI) increased 3.5% over the last 12 months. In Hawaii, the May 2026 Urban Hawaii (Honolulu) CPI increased 5.1% over the last 12 months. Under the PBR Framework, inflation risk for the Utilities is partially mitigated by an Annual Revenue Adjustment (ARA), which is based on a formula that includes a compounded and non-compounded portion.

•The compounded portion of the ARA includes an adjustment for the annual change in inflation based on the estimated change in Gross Domestic Product Price Index (GDPPI) for the upcoming year, less a predetermined annual productivity factor (currently set at zero), less a 0.22% customer dividend, applied to a basis equal to test year target revenues plus the Rate Adjustment Mechanism revenue in effect prior to the implementation of PBR, plus the prior adjustment year’s compounded portion of the ARA. The inflation factor percentage is the consensus projection of annual percentage change in GDPPI for the following calendar year published by Blue Chip Economic Indicators each October. For the 2025 calendar year, the forecasted 2025 GDPPI was 1.98% (net of the 0.22% customer dividend), measured in October 2024, and became effective in rates on January 1, 2025. For the 2026 calendar year, the forecasted 2026 GDPPI was 2.58% (net of the 0.22% customer dividend), measured in October 2025, and became effective in rates on January 1, 2026.

•The non-compounded portion of the ARA includes a subtractive component, representing the management audit savings commitment, or refund to customers, which was approved by the PUC to supplement the 0.22% customer dividend discussed above to make up the total customer dividend that will be applied to the ARA formula during the multi-year rate period (MRP).

Recent regulatory and legislative developments.

Alternative re-basing. See “Regulatory proceedings” in Note 4 of the Condensed Consolidated Financial Statements.

Affiliate transactions. In June 2025, the Utilities submitted a request with the PUC to terminate or indefinitely suspend all or specific provisions of the Affiliate Transaction Requirements (ATRs). On October 31, 2025, following a September 2025 PUC order providing guidance on topics to be addressed in such a request, HEI and Hawaiian Electric filed a revised request. Beginning in 2024 and continuing into 2026, HEI has embarked on a strategy to divest all of its affiliated companies other than the Utilities, with the intent for the Utilities to be HEI’s sole operating companies. In their filing, HEI and Hawaiian Electric described how termination or suspension of the ATRs would allow implementation of a corporate integration, under which all HEI employees would move to Hawaiian Electric, a few officer positions would manage and operate both HEI and Hawaiian Electric (dual-hatted executives), and the HEI and Hawaiian Electric boards of directors would be composed of a single set of individuals. On March 23, 2026, the PUC issued an order approving the indefinite suspension of the ATR provisions requested by HEI and Hawaiian Electric. The PUC’s approval is subject to specified commitments, including HEI’s divestment of all remaining Pacific Current and affiliated assets, a prohibition on pursuing new diversification activities, continued compliance with Hawaii Revised Statutes Section 269-19.5 governing affiliated interests, and ongoing cooperation with the PUC, including reporting obligations. Pursuant to those reporting requirements, HEI filed a report establishing a divestment timeline for remaining affiliate assets and is providing monthly progress reports to the PUC. The order also requires advance notice to the PUC and the Consumer Advocate prior to seeking any change in recovery of HEI-related expenses in future re-basing or rate proceedings. The PUC subsequently issued an order confirming that all ATR compliance filings and reporting are likewise suspended and closed the docket. HEI and Hawaiian Electric implemented the integration in June 2026.

System reliability. Since the August 2023 Maui windstorm and wildfires, the Utilities have developed a set of interim wildfire safety measures to mitigate the risk of wildfires in areas identified as having higher risk of wildfire in all service territories (Oahu, Maui County, and Hawaii Island). These interim measures represent actions the Utilities performed in 2024. On January 10, 2025, the Utilities filed their 2025-2027 Wildfire Mitigation Plan (WMP, also referred to as Wildfire Safety Strategy or WSS) with the PUC, which outlines their plans to reduce wildfire risk throughout their service territories over the three years, and was approved by the PUC on December 31, 2025. The PUC also directed the Utilities to provide a WMP update bi-annually. On April 13, 2026, the Utilities submitted their 2026-2027 WMP update to the PUC. The WMP update primarily reflects 1) maturation of the wildfire mitigation framework following the 2025-2027 WMP, 2) direct responses to the PUC’s areas of continuous improvement identified in a decision and order, and 3) other non-substantive revisions for clarity. These measures result in disruptions to service and negatively impact Transmission and Distribution (T&D) System Average Interruption Duration Index (SAIDI) and System Average Interruption Frequency Index (SAIFI). While the Utilities work to refine these measures over time to mitigate customer impacts, the Utilities are currently focused on taking immediate steps to keep island communities safe during extreme weather events. For a discussion regarding the launch of the Public Safety Power Shutoff program, see discussion below under “Wildfire safety measures.”

Hawaii Island has two generators out of service for extended maintenance, one of which is expected to return to service in the fourth quarter of 2026. While these units are unavailable for maintenance, during certain periods there may be reductions in generation reserve margins and failure of other generators, which could risk generation shortfalls.

For a discussion regarding the impact of the Maui windstorm and wildfires on the Utilities’ liquidity and capital resources, see discussion below under “Financial Condition–Liquidity and capital resources.”