HAWAIIAN ELECTRIC CO INC

1 Also, see the all other segment discussion below.

The Company’s effective tax rates for the first nine months of 2026 and 2025 were 15% and 25%, respectively. For the third quarters of 2026 and 2025, the Company’s effective tax rates were (82)% (tax benefit) and 22% tax expense, respectively. The lower effective tax rate for the first nine months of 2026, compared to the same period in 2025, was primarily due to discrete tax benefits recognized in 2026 from the valuation allowance release related to the gains on the ASB investment and research and development tax credit claims recognized; partially offset by the substantially higher pretax income related to the remeasurement of the wildfire tort-related settlement liability to present value (net of accretion) and investment in ASB to fair market value, net of the impairment of Pacific Current assets. The lower effective tax rate for the third quarter of 2026, compared to the same period in 2025, was primarily due to discrete tax benefits recognized in third quarter of 2026 from the valuation allowance release related to the gains on the ASB investment, impairment of Pacific Current assets, accretion of the wildfire tort-related settlement liability, and research and development tax credit claims recognized.

Maui windstorm and wildfires related items, net. For the three and nine months ended September 30, 2026 and 2025, the Company’s incremental items related to the Maui windstorm and wildfires as discussed in Note 2 of the Condensed Consolidated Financial Statements, were as follows:

1 Includes $8.5 million recognized as an adjustment to the Wildfire tort-related claims for the nine months ended September 30, 2026.

2 Represents an adjustment related to remeasuring the remaining settlement liability at present value in accordance with Accounting Standards Codification Topic 835-30 Imputation of Interest.

3 Represents accretion expense related to remeasuring the remaining settlement liability, which is included in “Interest expense, net” and “Interest expense and other charges, net” in HEI’s and the Utilities’ Condensed Consolidated Statements of Income, respectively.

4 HEI consolidated includes insurance recovery related to the settlement of the securities class action of $47.8 million for the three and nine months ended September 30, 2025. Also includes adjustments related to costs that are no longer probable of recovery under the insurance policies. For the three and nine months ended September 30, 2025, HEI consolidated and Electric utility adjustments amount to $1.0 million and $7.6 million, respectively, of which, $0.5 million and $4.5 million were deferred to a regulatory asset, respectively, and are reported on line “Deferral treatment approved by the PUC.”

5 Pursuant to the PUC order received on February 12, 2025, deferral accounting treatment limited to insurance premiums and outside services and legal costs associated with the asset-based lending facility credit agreement incurred in 2025 was granted. Applicable amounts were deferred to a regulatory asset. See “Risk Factors” in Item 1A. for further discussion of regulatory risks. See Note 2 of the Condensed Consolidated Financial Statements.

Note: The all other segment Maui windstorm and wildfires related expenses (legal, outside services and other) and insurance recoveries are included in “Expenses-Other” and interest expense is included in “Interest expense, net” on the HEI and Subsidiaries Condensed Consolidated Statements of Income. See Electric utility section below for more detail.

From August 8, 2023 through September 30, 2026, HEI and its subsidiaries have incurred approximately $2.28 billion of Maui windstorm and wildfires related expenses, including the Utilities’ estimate of the losses related to a settlement of all wildfire tort-related legal claims and cross claims, the One ‘Ohana Initiative contribution and $47.8 million related to the securities class action settlement. Certain of these costs are reimbursable under excess liability insurance, professional liability insurance and directors and officers liability insurance policies. As of September 30, 2026, HEI and its subsidiaries have recovered the remaining unpaid insurance claim proceeds owed under its excess liability and professional liability insurance policies, and approximately $71 million of insurance coverage is remaining under the directors and officers liability policy, after deducting applicable retention amounts and amounts expected to be recovered for incurred costs such as the securities class action settlement that is recognized as a receivable as of the quarter end.

On April 10, 2026, the last condition to the finalization of the tort settlement agreements and first installment payment was satisfied when the last insurer agreed to a stipulation withdrawing with prejudice the appeal of the December 30, 2025 summary judgment entered in favor of HEI, Hawaiian Electric and other defendants. As a result, the Company paid the first of its four equal annual $479 million installments pursuant to the settlement agreements. In addition, on September 16, 2026, HEI made a partial prepayment of $40 million towards the second annual installment due in April 2027. On October 28, 2026, HEI made another partial prepayment of $40 million towards the second installment amount due in April 2027.

Economic conditions.

Note: The statistical data in this section is from public third-party sources that management believes to be reliable (e.g., Board of Governors of the Federal Reserve System, Department of Business, Economic Development and Tourism, University of Hawaii Economic Research Organization (UHERO), U.S. Bureau of Labor Statistics, and U.S. Energy Information Administration).

In the third quarter of 2026, the average daily passenger count was 1.6% lower than the comparable period in the prior year. The recovery in total passenger counts from the low levels in 2020, which occurred under COVID-19 restrictions, thus far has been driven by domestic travelers, with international traveler counts, including those from Japan, remaining at lower levels. In the third quarter, domestic passenger counts were 2.3% above 2019 levels, while international passenger counts (excluding Japan) remained 34.8% below 2019 levels. Due to the weak yen, Japanese visitors are 41.9% below 2019 levels.

Hawaii’s preliminary seasonally adjusted unemployment rate in September 2026 was 2.8%, which was an increase from the September 2025 rate of 2.1%. The national unemployment rate in September 2026 was 4.2%, slightly lower than the September 2025 rate of 4.4%. According to a recent forecast by UHERO, issued on September 25, 2026, jobs in the State will decrease by 0.2% in 2026.

Hawaii’s petroleum product prices are correlated to the crude oil price in international markets. The price of crude oil has increased 39.7% over the same quarter in the prior year.

At its September 16, 2026 meeting, the Federal Open Market Committee (FOMC) decided to raise the federal funds rate target range to 3.75% to 4.00%. The FOMC noted that while inflation remains elevated, domestic spending, productivity growth and capital investment are strong.

UHERO forecasts full year 2026 real GDP to increase 0.6%, real personal income to increase 1.1%, total visitor arrivals to decrease 0.7%, and an unemployment rate of 2.5% for the State. According to UHERO, Hawaii’s economy has slowed due to the war-driven oil prices and an active storm season. Gradual relief is expected as energy prices ease and storm recovery proceeds.

See also “Recent Developments” in the “Electric utility” section below for further discussion of the economic impact of recent events.

All other segment. The all other business segment loss includes results of the stand-alone corporate operations of HEI, ASB Hawaii and Pacific Current, including the results of Hamakua Energy and the solar and battery energy storage system facilities up until the close of their respective sales in 2025, and GLST1 up until its termination on June 3, 2026.

1 As a subsidiary of Hamakua Holdings, Hamakua Energy’s sales to Hawaii Electric Light (a regulated affiliate) up until the close of its sale on March 10, 2025, are eliminated in consolidation.

The all other business segment loss includes results of the stand-alone corporate operations of HEI (including eliminations of intercompany transactions) and the results of HEI’s subsidiaries, GLST1 (up until its termination on June 3, 2026), ASB Hawaii and Pacific Current. Significant investments of Pacific Current made through its subsidiaries include: Pacific Current’s indirect subsidiary up until the close of its sale on March 10, 2025, Hamakua Energy, which owned a 60-MW combined cycle power plant on Hawaii Island that provides electricity to Hawaii Electric Light; Pacific Current’s solar project subsidiaries up until the close of the Solar Asset Disposition effective August 1, 2025, including Mauo, which owned solar-plus-storage projects totaling 8.6 MW on five University of Hawaii campuses, Alenuihaha Developments, LLC, which owned a collection of renewable energy assets on Oahu and Kauai, and Ka‘ie‘ie Waho which owned a 6-MW solar photovoltaic system that provides renewable energy to Kauai Island Utility Cooperative; Pacific Current’s subsidiary, Mahipapa, which owns a 7.5-MW nameplate biomass facility on Kauai; as well as eliminations of intercompany transactions.

In late February 2024, Hamakua Energy’s combustion turbine and its leased combustion turbine unexpectedly sustained damages from contaminated fuel resulting in a plant shut down through June 2024. In addition, in March 2024, a fire, which was ignited from a vendor’s welding activities during scheduled maintenance, destroyed the cooling tower at the Mahipapa facility on Kauai resulting in a plant shutdown through December 2024. The Company is currently working with its legal counsel on seeking recovery of its losses related to damages sustained to its plant facilities.

As part of HEI’s comprehensive review of strategic options for certain assets of Pacific Current, in March 2025, Pacific Current closed on the sale of Hamakua Holdings, a then wholly owned subsidiary of Pacific Current and parent company of Hamakua Energy, to an unaffiliated third party. In addition, in August 2025, Pacific Current, through an indirect subsidiary, sold all of its membership interests in Mauo, Alenuihaha Developments, LLC, Kaʻieʻie Waho and Upena, LLC. On November 3, 2026, Mahipapa filed a voluntary petition for bankruptcy under Chapter 7 in the United States Bankruptcy Court for the District of Hawaii. See Note 3 of the Condensed Consolidated Financial Statements for more information.

FINANCIAL CONDITION

Liquidity and capital resources. See “Credit and Capital Market Risk” in Item 1A. Risk Factors in HEI’s and Hawaiian Electric’s 2025 Form 10-K and in Item 1A. Risk Factors below.

HEI’s and the Utilities’ future results of operations are subject to significant risks and uncertainties. Factors that could cause actual results to differ materially from expectations include, but are not limited to, access to lower-cost sources of capital, the ability to attract and retain key personnel, and pending or threatened litigation, including the wildfire-related litigation described above.

The Company remains focused on maintaining a strong and financially healthy enterprise and has taken additional measures to strengthen its financial position while continuing to provide reliable service to customers and support its long-term commitments to Hawaii and its communities. In September 2025, HEI and Hawaiian Electric each entered into a fourth amended and restated credit agreement with a syndicate of eight financial institutions, increasing each of their committed capacities to $300 million (see Note 5 of the Condensed Consolidated Financial Statements). As of September 30, 2026, neither HEI nor Hawaiian Electric had any borrowings outstanding under its revolving credit facility or any commercial paper outstanding.

In addition, in May 2024, Hawaiian Electric entered into an asset-based credit facility that allows borrowings of up to $250 million (see Note 5 of the Condensed Consolidated Financial Statements), and in September 2024, HEI registered with the SEC an at-the-market offering program under which HEI may offer and sell, from time to time at its sole discretion, its common stock, without par value, having an aggregate offering price of up to $250 million. To date, Hawaiian Electric has not drawn on its asset-based credit facility and HEI has not sold any common stock under its at-the-market offering program. Other proactive measures included suspending HEI’s quarterly common stock dividend after payment of the second quarter dividend in September 2023, repaying outstanding revolving credit facility borrowings and reducing or eliminating discretionary costs.

As of September 30, 2026, HEI consolidated had $2.3 billion of long-term debt and Hawaiian Electric had accrued estimated wildfire liabilities, at present value, of approximately $1.3 billion (pre-tax), related to the settlement of the Maui windstorm and wildfire tort-related legal claims (see Note 2 of the Condensed Consolidated Financial Statements). On April 10, 2026, HEI and Hawaiian Electric paid the first $479 million of four equal annual installments of the wildfire settlement liability using proceeds from HEI’s sale of 62.2 million shares of common stock in September 2024. In addition, on September 16, 2026, HEI made a partial prepayment of $40 million towards the second annual installment due in April 2027. As of September 30, 2026, Hawaiian Electric classified $376 million of the settlement as a current liability and $903 million as a noncurrent liability on HEI’s and the Utilities’ Condensed Consolidated Balance Sheets. On October 28, 2026, HEI made another partial prepayment of $40 million towards the second installment amount due in April 2027.

The following table provides the components of available liquidity as of September 30, 2026. See “Liquidity and capital resources” in Hawaiian Electric’s MD&A below for components of its available liquidity under existing credit facilities as of September 30, 2026.

1 Pursuant to an HEI and Hawaiian Electric Intercompany Borrowing and Investment Policy, Hawaiian Electric may borrow up to $75 million under its standing commitment letter. Hawaiian Electric currently has no borrowings under this commitment. See Note 5 of the Condensed Consolidated Financial Statements for a description of the HEI and Hawaiian Electric Intercompany Borrowing and Investment Policy.

Management believes the Company’s $224 million of cash and cash equivalents as of September 30, 2026, together with the available capacity under Hawaiian Electric’s ABL Facility, HEI’s and Hawaiian Electric’s syndicated credit facilities and

HEI’s registered at-the-market offering program, provides sufficient liquidity to meet the Company’s financial obligations and sustain operations in the short term. If additional short-term liquidity is needed, Hawaiian Electric may reduce the pace of capital spending related to non-essential projects, manage O&M expenses, seek additional borrowings, and/or explore asset sales.

The Company expects long-term liquidity will continue to be impacted by the remaining wildfire settlement payments; the Company’s below investment grade credit ratings, which may limit the Company from readily accessing low-cost unsecured, short-term borrowings and other sources of debt and equity financing on favorable terms; and higher working capital requirements resulting from inflation and elevated fuel prices. The Company is currently working with its financial advisors on a financing plan to raise the additional capital necessary to fund the remaining settlement payments for the wildfire tort claims. While management believes the Company will be able to raise the necessary capital, there is no assurance that management’s plans will be successful. If unsuccessful, the Company may pursue other strategic alternatives. See further discussion in “Risk Factors” in Item 1A.

Credit ratings. On April 21, 2026 and July 22, 2026, Moody’s and S&P, respectively, upgraded HEI’s credit ratings. On August 11, 2026, S&P withdrew HEI’s short-term and commercial paper ratings at the Company’s request due to lack of access to the commercial paper market. As of October 30, 2026, the Fitch, Moody’s, and S&P ratings of HEI were as follows:

1 As of December 31, 2025. In March 2026, S&P revised HEI’s outlook to “Positive” from “CreditWatch Positive” and affirmed the “B+” issuer credit rating.

NP - Not Prime.

WR - Withdrawn rating.

Note: The above ratings reflect only the view, at the time the ratings are issued or affirmed, of the applicable rating agency, from whom an explanation of the significance of such ratings may be obtained. Such ratings are not recommendations to buy, sell or hold any securities; such ratings may be subject to revision or withdrawal at any time by the rating agencies; and each rating should be evaluated independently of any other rating.

HEI consolidated material cash requirements. Material cash requirements of HEI consolidated include: payments related to settlement of tort-related legal claims and cross claims; Utility-related capital expenditures (including capital expenditures related to wildfires and wildfire mitigations), labor and benefits costs, O&M expenses, fuel and purchase power costs, and debt and interest payments; HEI-related debt and interest payments; and HEI equity contributions to support Mahipapa, Pacific Current’s subsidiary.

The consolidated capital structure of HEI was as follows:

HEI also periodically makes short-term loans to Hawaiian Electric to meet Hawaiian Electric’s cash requirements, including the funding of loans by Hawaiian Electric to Hawaii Electric Light and Maui Electric, but no such short-term loans to Hawaiian Electric were outstanding as of September 30, 2026.

See Note 5 of the Condensed Consolidated Financial Statements for a brief description of the Company’s loans.

There were no new issuances of common stock through the DRIP or the HEIRSP for the nine months ended September 30, 2026 and 2025.

For the first nine months of 2026, net cash used in operating activities of HEI consolidated was $231 million, which included the first installment of the settlement payment. Net cash used in investing activities for the same period was $363 million, primarily due to capital expenditures. Net cash used in financing activities for the same period was $162 million, primarily due to repayment of long-term debt.

Dividends. The payout ratios for the first nine months of 2026 and full year 2025 were nil. Each quarter, the HEI Board of Directors evaluates whether to declare a dividend and considers many factors in the evaluation including, but not limited to, the Company’s results of operations, liquidity, the long-term prospects for the Company, current and expected future economic conditions, and capital investment alternatives. In August 2023, in consideration of the potential impact from the Maui windstorm and wildfires, the HEI Board of Directors voted to suspend the quarterly cash dividend, starting after the second quarter 2023 dividend, and has not declared a cash dividend since that time. This action was intended to allow the Company to provide additional liquidity and allocate resources to reducing wildfire risk and rebuilding and restoring power and help ensure a strong future for the Utilities. In May 2025, after a temporary suspension of Hawaiian Electric’s quarterly cash dividend to HEI that began with the second quarter 2024 dividend, the Hawaiian Electric Board of Directors approved a $10 million dividend for each quarter of 2025 and an $11 million dividend for each of the first, second and third quarters of 2026. This decision was made after considering several factors, including the continued progress of the Maui windstorm and wildfire settlement, the Utilities’ results of operations and the Utilities’ liquidity position.

MATERIAL ESTIMATES AND CRITICAL ACCOUNTING POLICIES

In preparing financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses. Actual results could differ significantly from those estimates.

In accordance with SEC Release No. 33-8040, “Cautionary Advice Regarding Disclosure About Critical Accounting Policies,” management has identified the accounting policies it believes to be the most critical to the Company’s financial statements—that is, management believes that these policies are both the most important to the portrayal of the Company’s results of operations and financial condition, and currently require management’s most difficult, subjective or complex judgments.

For information about these material estimates and critical accounting policies, in addition to the critical policy discussed below, see pages 42, 43, 61 and 62 of the MD&A included in Part II, Item 7 of HEI’s and Hawaiian Electric’s 2025 Form 10-K.

Following are discussions of the results of operations, liquidity and capital resources of the electric utility segment.