Electric utility segment | 12 Months Ended |
Dec. 31, 2013 |
Electric utility subsidiary | ' |
Electric utility segment | ' |
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3 · Electric utility segment | | | | | | | | | | | | | | | | | | | | |
Regulatory assets and liabilities. In accordance with ASC Topic 980, “Regulated Operations,” the Utilities’ financial statements reflect assets, liabilities, revenues and expenses based on current cost-based rate-making regulations. Their continued accounting under ASC Topic 980 generally requires that rates are established by an independent, third-party regulator; rates are designed to recover the costs of providing service; and it is reasonable to assume that rates can be charged to and collected from customers. Management believes the Utilities’ operations currently satisfy the ASC Topic 980 criteria. If events or circumstances should change so that those criteria are no longer satisfied, the Utilities expect that the regulatory assets, net of regulatory liabilities, would be charged to the statement of income in the period of discontinuance, which may result in a material adverse effect on the Company’s and the Utilities' financial condition, results of operations and/or liquidity. |
Regulatory assets represent deferred costs expected to be fully 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. 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, 2013 are noted. |
Regulatory assets were as follows: |
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December 31 | 2013 | | | 2012 | | | | | | | | | | | | | | |
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(in thousands) | | | | | | | | | | | | | | | | | | |
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Retirement benefit plans (balance primarily varies with plans’ funded statuses) | $ | 350,821 | | | $ | 660,835 | | | | | | | | | | | | | | |
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Income taxes, net (1 to 55 years) | 85,430 | | | 84,931 | | | | | | | | | | | | | | |
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Decoupling revenue balancing account (1 to 2 years) | 90,386 | | | 66,076 | | | | | | | | | | | | | | |
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Unamortized expense and premiums on retired debt and equity issuances (14 to 30 years; 2 to 20 years remaining) | 17,342 | | | 17,130 | | | | | | | | | | | | | | |
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Vacation earned, but not yet taken (1 year) | 9,149 | | | 8,493 | | | | | | | | | | | | | | |
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Postretirement benefits other than pensions (18 years; 1 year remaining) | 62 | | | 249 | | | | | | | | | | | | | | |
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Other (1 to 50 years; 1 to 47 years remaining) | 22,734 | | | 26,882 | | | | | | | | | | | | | | |
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| $ | 575,924 | | | $ | 864,596 | | | | | | | | | | | | | | |
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Included in: | | | | | | | | | | | | | | | | | | |
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Current assets | $ | 69,738 | | | $ | 51,267 | | | | | | | | | | | | | | |
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Long-term assets | 506,186 | | | 813,329 | | | | | | | | | | | | | | |
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| $ | 575,924 | | | $ | 864,596 | | | | | | | | | | | | | | |
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Regulatory liabilities were as follows: |
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December 31 | 2013 | | | 2012 | | | | | | | | | | | | | | |
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(in thousands) | | | | | | | | | | | | | | | | | | |
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Cost of removal in excess of salvage value (1 to 60 years) | $ | 315,164 | | | $ | 305,978 | | | | | | | | | | | | | | |
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Retirement benefit plans (5 years beginning with respective utility’s next rate case; primarily 5 years remaining) | 31,546 | | | 15,563 | | | | | | | | | | | | | | |
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Other (5 years; 1 to 2 years remaining) | 2,589 | | | 2,611 | | | | | | | | | | | | | | |
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| $ | 349,299 | | | $ | 324,152 | | | | | | | | | | | | | | |
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Included in: | | | | | | | | | | | | | | | | |
Current liabilities | $ | 1,916 | | | $ | 1,212 | | | | | | | | | | | | | | |
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Long-term liabilities | 347,383 | | | 322,940 | | | | | | | | | | | | | | |
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| $ | 349,299 | | | $ | 324,152 | | | | | | | | | | | | | | |
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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% ($340 million), 11% ($349 million) and 11% ($316 million) of their operating revenues from the sale of electricity to various federal government agencies in 2013, 2012 and 2011, 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: |
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31-Dec-13 | Voluntary | | Redemption | | | | | | | | | | | | | |
liquidation price | price | | | | | | | | | | | | | |
Series | | | | | | | | | | | | | | | | | | |
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C, D, E, H, J and K (Hawaiian Electric) | $ | 20 | | | $ | 21 | | | | | | | | | | | | | | |
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I (Hawaiian Electric) | 20 | | | 20 | | | | | | | | | | | | | | |
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G (Hawaii Electric Light) | 100 | | | 100 | | | | | | | | | | | | | | |
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H (Maui Electric) | 100 | | | 100 | | | | | | | | | | | | | | |
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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 $6.2 million, $6.1 million and $4.9 million for general management and administrative services in 2013, 2012 and 2011, 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. |
Hawaiian Electric’s short-term borrowings from HEI fluctuate during the year, and totaled nil at December 31, 2013 and 2012. The interest charged on short-term borrowings from HEI is based on the lower of HEI’s or Hawaiian Electric’s effective weighted average short-term external borrowing rate. If both HEI and Hawaiian Electric do not have short-term external borrowings, the interest is based on the average of the effective rate for 30-day dealer-placed commercial paper quoted by the Wall Street Journal plus 0.15%. |
Borrowings among the Utilities are eliminated in consolidation. Interest charged by HEI to Hawaiian Electric was nil in 2013, nil in 2012 and de minimis in 2011. |
Commitments and contingencies. |
Fuel contracts. The Utilities have contractual agreements to purchase minimum quantities of fuel oil, diesel fuel and biodiesel for multi-year periods, some through December 31, 2016. Fossil fuel prices are tied to the market prices of crude oil and petroleum products in the Far East and U.S. West Coast and the biodiesel price is tied to the market prices of animal fat feedstocks in the U.S. West Coast and U.S. Midwest. Based on the average price per barrel as of December 31, 2013, the estimated cost of minimum purchases under the fuel supply contracts is $0.9 billion in 2014, $0.7 billion in 2015 and $0.4 billion in 2016. The actual cost of purchases in 2014 and future years could vary substantially from this estimate as a result of changes in market prices, quantities actually purchased and/or other factors. The Utilities purchased $1.1 billion, $1.3 billion and $1.3 billion of fuel under contractual agreements in 2013, 2012 and 2011, respectively. |
Hawaiian Electric and Chevron Products Company (Chevron), a division of Chevron USA, Inc., are parties to an amended contract for the purchase/sale of low sulfur fuel oil (LSFO), which terminates on December 31, 2016 and may automatically renew for annual terms thereafter unless earlier terminated by either party. The PUC approved the recovery of costs incurred under this contract on April 30, 2013. |
Hawaiian Electric and Tesoro Hawaii Corp. (Tesoro) are parties to an amended LSFO supply contract (LSFO contract), which runs through December 31, 2014 and may automatically renew for annual terms thereafter unless earlier terminated by either party. The PUC approved the recovery of costs incurred under this contract on April 30, 2013. On September 25, 2013, Tesoro sold its Hawaii refinery and related distribution and marketing assets to Hawaii Independent Energy, LLC, a wholly owned subsidiary of Par Petroleum Corporation of Houston Texas. |
The Utilities are parties to amended contracts for the supply of industrial fuel oil and diesel fuels with Chevron and Tesoro, respectively, which end December 31, 2015. Both agreements may be automatically renewed for annual terms thereafter unless earlier terminated by either of the respective parties. |
The energy charge for energy purchased from Kalaeloa Partners, L.P. (Kalaeloa) under Hawaiian Electric’s PPA with Kalaeloa is based, in part, on the price Kalaeloa pays Tesoro for LSFO under a Facility Fuel Supply Contract (fuel contract) between them. The fuel contract between Kalaeloa and Tesoro term ends May 31, 2016 and may be extended for terms thereafter unless terminated by one of the parties. |
The costs incurred under the Utilities’ fuel contracts are included in their respective ECACs, to the extent such costs are not recovered through the Utilities’ base rates. |
Power purchase agreements. As of December 31, 2013, the Utilities had six firm capacity PPAs for a total of 567 megawatts (MW) of firm capacity. Purchases from these six independent power producers (IPPs) and all other IPPs totaled $0.7 billion for each of 2013, 2012 and 2011. 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 are expected to be approximately $0.1 billion per year for 2014 through 2018 and a total of $0.6 billion in the period from 2019 through 2033. |
In general, the Utilities base their payments under the PPAs upon available capacity and actually supplied energy 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 ECAC 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, 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 will continue to be recovered through the ECAC to the extent they are not recovered through base rates. |
Hawaii Clean Energy Initiative. In January 2008, the State of Hawaii (State) and the U.S. Department of Energy signed a memorandum of understanding establishing the Hawaii Clean Energy Initiative (HCEI). In October 2008, the Governor of the State, the State Department of Business, Economic Development and Tourism (DBEDT), the Division of Consumer Advocacy of the State Department of Commerce and Consumer Affairs and the Utilities (collectively, the parties), signed an agreement setting forth goals and objectives under the HCEI and the related commitments of the parties (the Energy Agreement), including pursuing a wide range of actions to decrease the State’s dependence on imported fossil fuels through substantial increases in renewable energy and programs intended to secure greater energy efficiency and conservation. Many of the actions and programs included in the Energy Agreement require approval of the PUC. |
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 can result in significantly increased project costs or even cancellation of projects. Further, completion of projects is subject to various risks, such as problems or disputes with vendors. 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, project costs may need to be written off in amounts that could result in significant reductions in Hawaiian Electric’s consolidated net income. |
In May 2011, the PUC ordered independently conducted regulatory audits on the reasonableness of costs incurred for Hawaiian Electric’s East Oahu Transmission Project (EOTP), Campbell Industrial Park (CIP) combustion turbine No. 1 (CT-1) project, and Customer Information System (CIS) project. However, in March 2012, the PUC eliminated the requirement for a regulatory audit for the EOTP Phase I in connection with an approved settlement of the EOTP Phase I project cost issues and, in March 2013, the PUC eliminated the requirement for an audit of the CIP CT-1 and CIS project costs as described below. |
On January 28, 2013, the Utilities and the Consumer Advocate signed a settlement agreement (2013 Agreement), subject to PUC approval, to write off $40 million of costs in lieu of conducting the regulatory audits of the CIP CT-1 project and the CIS project. Based on the 2013 Agreement, as of December 31, 2012, the Utilities recorded an after-tax charge to net income of approximately $24 million — $17.1 million for Hawaiian Electric, $3.4 million for Hawaii Electric Light, and $3.2 million for Maui Electric. The remaining recoverable costs for these projects of $52 million were included in rate base as of December 31, 2012. |
As part of the 2013 Agreement, Hawaii Electric Light would withdraw its 2013 test year rate case, and delay filing a new rate case until a 2016 test year. Additionally, Hawaiian Electric would delay the filing of its scheduled 2014 test year rate case to no earlier than January 2, 2014. For both Utilities, the existing terms of the last rate case decisions would continue. Hawaiian Electric would also be allowed to record Revenue Adjustment Mechanism (RAM) revenues starting on January 1 of 2014, 2015 and 2016. The cash collection of RAM revenues would remain unchanged, starting June 1 of each year through May 31 of the following year. |
On March 19, 2013, the PUC issued a decision and order (2013 D&O) approving the 2013 Agreement, with the following clarifications, none of which changed the financial impact of the settlement recorded as of December 31, 2012: (1) the PUC reiterated its authority to examine and ascertain what post go-live CIS costs would be subject to regulatory review in future rate cases; (2) the PUC discouraged requesting single issue cost deferral accounting and/or cost recovery mechanisms during the period of rate case deferral by Hawaiian Electric and Hawaii Electric Light; (3) the PUC approved the agreed-upon recovery of CIP CT-1 and CIS project costs through the RAM, as set forth in the 2013 Agreement, however not setting a precedent for future projects; and (4) the PUC reaffirmed its right to rule on the substance of the Maui Electric 2012 test year rate case in its ongoing rate case proceeding. On May 31, 2013, the PUC issued a final D&O in the Maui Electric 2012 test year rate case. See “Maui Electric 2012 test year rate case” below. |
In March 2012, the PUC approved a settlement agreement reached among Hawaiian Electric, the Consumer Advocate and the Department of Defense, under which, in lieu of a regulatory audit, Hawaiian Electric would write off $9.5 million of EOTP Phase 1 gross plant in service and associated adjustments. This resulted in an after-tax charge to net income in the fourth quarter of 2011 of approximately $6 million and the elimination of the requirement for a Phase 1 regulatory audit. The PUC also provided for an additional increase of approximately $5 million in Hawaiian Electric’s 2011 test year rate case for the additional revenue requirements reflecting all remaining Phase 1 costs not previously included in rates or agreed to be written off. |
Renewable energy projects. The Utilities are committed to achieving or exceeding the State’s Renewable Portfolio Standard (RPS) goal of 40% renewable energy by 2030 and to meeting their commitments relating to decreasing the State’s dependence on imported fossil fuels under their 2008 Energy Agreement with the Governor, the DBEDT and the Consumer Advocate (Energy Agreement). The Utilities continue to evaluate and pursue opportunities with developers of proposed projects to integrate power into its grid from a variety of renewable energy sources, including solar, biomass, wind, ocean thermal energy conversion, wave, geothermal and others. |
In December 2009, the PUC allowed Hawaiian Electric to defer the costs of studies for a large wind project for later review of prudence and reasonableness. In April 2013, the PUC approved the recovery of $3.9 million in costs for stage 1 studies for the large wind project over a three-year period, with carrying costs to be accrued over the recovery period at the rate of 1.75% per annum, through the Renewable Energy Infrastructure Program (REIP) Surcharge. |
In November 2011, Hawaiian Electric and Maui Electric filed their application to seek PUC approval to defer for later recovery approximately $555,000 (split evenly between Hawaiian Electric and Maui Electric) also through the REIP surcharge for additional studies to determine the value proposition of interconnecting the islands of Oahu and of Maui County (Maui, Lanai, and Molokai) and if doing so would be operationally beneficial and cost-effective. In August 2012, the PUC allowed Hawaiian Electric and Maui Electric to defer the outside service costs for the additional studies for later review of prudence and reasonableness. The specific amount to be recovered, as well as the recovery mechanism and the terms of the recovery mechanism, were to be determined at a later date. |
A revised draft Request for Proposals (RFP) for 200MW or more of renewable energy to be delivered to Oahu from any of the Hawaiian Islands was posted on Hawaiian Electric's website prior to the issuance of a proposed final RFP. In February 2012, the PUC granted Hawaiian Electric’s request for deferred accounting treatment for the inter-island project support costs. The amount of the deferred costs was limited to $5.89 million. On July 11, 2013, the PUC issued orders related to the 200 MW RFP. First, it issued an order that Hawaiian Electric shall amend its current draft of the Oahu 200 MW RFP to remove references to the Lanai Wind Project, eliminate solicitations for an undersea transmission cable, and amend the draft RFP to reflect other guidance provided in the order. Second, it initiated an investigative proceeding to review the progress of the Lanai Wind Project stating that there was an uncertainty whether the project developer retained an equivalent ability to develop the project as when it submitted its bid in 2008 and its term sheet in 2011. The PUC also stated that it will review the PPA (if one is completed) and, as part of that process, determine whether the Lanai Wind Project should be developed taking into account potential as-available renewable energy projects and grid infrastructure options. The PUC stated it intends to evaluate the project as a combined resources proposal (i.e., wind project and generation tie transmission cable between the islands of Oahu and Lanai). Third, the PUC initiated a proceeding to solicit information and evaluate whether an interisland grid interconnection transmission system between the islands of Oahu and Maui is in the public interest, given the potential for large-scale wind and solar projects on Maui. |
In May 2012, the PUC instituted a proceeding for a competitive bidding process for up to 50MW of firm renewable geothermal dispatchable energy (Geothermal RFP) on the island of Hawaii, and in July 2012, Hawaii Electric Light filed an application to defer 2012 costs related to the Geothermal RFP. In February 2013, Hawaii Electric Light issued the Final Geothermal RFP. Six bids were received in April 2013 and are being evaluated. |
In June 2013, Hawaiian Electric filed an application requesting PUC approval of Waivers from the Framework for Competitive Bidding for 5 projects (4 photovoltaic and 1 wind) selected as part of Hawaiian Electric’s “Invitation for Low Cost Renewable Energy Projects on Oahu through Request for Waiver from Competitive Bidding.” Subsequently, two of the projects were withdrawn and in February 2014, three of the projects were granted waivers from the Competitive Bidding Framework. In November 2013, Hawaiian Electric filed a second waiver application requesting PUC approval for two additional projects (6 photovoltaic) selected as part of Hawaiian Electric's pricing refresh opportunity provided to developers that originally submitted proposals in response to the “Invitation for Low Cost Renewable Energy Projects on Oahu through Request for Waiver from Competitive Bidding.” |
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. In recent years, legislative, regulatory and governmental activities related to the environment, including proposals and rulemaking under the Clean Air Act (CAA) and Clean Water Act (CWA), have increased significantly and management anticipates that such activity will continue. |
On April 20, 2011, the Federal Register published the federal Environmental Protection Agency’s (EPA’s) proposed regulations required by section 316(b) of the CWA designed to protect aquatic organisms from adverse impacts associated with existing power plant cooling water intake structures. The proposed regulations would apply to the cooling water systems for the steam generating units at Hawaiian Electric’s power plants on the island of Oahu. If adopted as proposed, management believes the proposed regulations would require significant capital and annual O&M expenditures. On June 11, 2012, the EPA published additional information on the section 316(b) rule making that indicates that the EPA is considering establishing lower cost compliance alternatives in the final rule. The EPA has delayed issuance of the final section 316(b) rule. |
On February 16, 2012, the Federal Register published the EPA’s final rule establishing the EPA’s National Emission Standards for Hazardous Air Pollutants for fossil-fuel fired steam electrical generating units (EGUs). The final rule, known as the Mercury and Air Toxics Standards (MATS), applies to the 14 EGUs at Hawaiian Electric’s power plants. MATS establishes the Maximum Achievable Control Technology standards for the control of hazardous air pollutants emissions from new and existing EGUs. Based on a review of the final rule and the benefits and costs of alternative compliance strategies, Hawaiian Electric has selected a MATS compliance strategy based on switching to lower emission fuels. The use of lower emission fuels will provide for MATS compliance at lower overall costs and avoid the reduction in operational flexibility imposed by emissions control equipment. Hawaiian Electric requested and received a one-year extension, resulting in a MATS compliance date of April 16, 2016. Hawaiian Electric also has pending with the EPA a Petition for Reconsideration and Stay dated April 16, 2012, and a Request for Expedited Consideration dated August 14, 2013. The submittals ask the EPA to revise an emissions standard for non-continental oil-fired EGUs on the grounds that the promulgated standard was incorrectly derived. The Petition and Request submittals to the EPA included additional data to demonstrate that the existing standard is erroneous. Hawaiian Electric has been in contact with the EPA regarding the status of its Petition and does not expect a decision before mid-2014. |
On February 6, 2013, the EPA issued a guidance document titled “Next Steps for Area Designations and Implementation of the Sulfur Dioxide National Ambient Air Quality Standard,” which outlines a process that will provide the states additional flexibility and time for their development of one-hour sulfur dioxide NAAQS implementation plans. Hawaiian Electric will work with the DOH and the EPA in the rulemaking process for these implementation plans to ensure development of cost-effective strategies for NAAQS compliance. Based on the February 6, 2013 EPA guidance document, current estimates of the compliance date for the one-hour sulfur dioxide NAAQS is in the 2022 or later timeframe. Pending litigation may result in an accelerated timeframe, but the impact of the litigation cannot be predicted at this time. |
Depending upon the final outcome of the CWA 316(b) regulations,the specific measures required for MATS compliance, and the rules and guidance developed for implementation of more stringent National Ambient Air Quality Standards, the Utilities may be required to incur material capital expenditures and other compliance costs, but such amounts are not determinable at this time. Additionally, the combined effects of these regulatory initiatives may result in a decision to retire or deactivate certain generating units earlier than anticipated. |
Hawaiian Electric, Hawaii Electric Light and Maui Electric, like other utilities, periodically experience petroleum or other chemical releases into the environment associated with current operations and 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 adverse effect, individually or in the aggregate, on Hawaiian Electric’s consolidated results of operations, financial condition or liquidity. |
Potential Clean Air Act Enforcement. On July 1, 2013, Hawaii Electric Light and Maui Electric received a letter from the U.S. Department of Justice (DOJ) asserting potential violations of the Prevention of Significant Deterioration (PSD) and Title V requirements of the Clean Air Act involving the Hill and Kahului Power Plants. The EPA referred the matter to the DOJ for enforcement based on Hawaii Electric Light’s and Maui Electric’s responses to information requests in 2010 and 2012. The letter expresses an interest in resolving the matter without the issuance of a notice of violation. The parties are scheduled to meet in February 2014 to engage in settlement discussions. Hawaii Electric Light and Maui Electric cannot currently estimate the amount or effect of a settlement, if any. Hawaii Electric Light and Maui Electric continue to investigate the potential bases for the DOJ’s claims. |
Former Molokai Electric Company generation site. In 1989, Maui Electric acquired by merger 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 EPA has since performed Brownfield assessments of the Site that identified environmental impacts in the subsurface. Although Maui Electric never operated at the Site and operations there had stopped four years before the merger, in discussions with the EPA and the DOH, Maui Electric agreed to undertake additional investigations at the Site and an adjacent parcel that Molokai Electric Company had used for equipment storage (the Adjacent Parcel) to determine the extent of impacts of subsurface contaminants. A 2011 assessment by a Maui Electric contractor of the Adjacent Parcel identified environmental impacts, including elevated polychlorinated biphenyls (PCBs) in the subsurface soils. In cooperation with the DOH and EPA, Maui Electric is further investigating the Site and the Adjacent Parcel to determine the extent of impacts of PCBs, fuel oils, and other subsurface contaminants. In March 2012, Maui Electric accrued an additional $3.1 million (reserve balance of $3.6 million as of December 31, 2013) for the additional investigation and estimated cleanup costs at the Site and the Adjacent Parcel; however, final costs of remediation will depend on the results of continued investigation. Maui Electric received DOH and EPA comments on a revised draft site investigation plan for site characterization in October and November 2013, respectively, both of which did not result in a change to the reserve balance. Maui Electric is currently revising the draft site investigation plan to address the DOH and EPA comments. |
Global climate change and greenhouse gas emissions reduction. National and international concern about climate change and the contribution of greenhouse gas (GHG)emissions (including carbon dioxide emissions from the combustion of fossil fuels) to climate change have led to action by the State and to federal legislative and regulatory proposals to reduce GHG emissions. |
In July 2007, Act 234, which requires a statewide reduction of GHG emissions by January 1, 2020 to levels at or below the statewide GHG emission levels in 1990, became law in Hawaii. The Utilities participated in a Task Force established under Act 234, which was charged with developing a work plan and regulatory approach to reduce GHG emissions, as well as in initiatives aimed at reducing their GHG emissions, such as those being implemented under the Energy Agreement. On October 19, 2012, the DOH posted the proposed regulations required by Act 234 for public hearing and comment. In general, the proposed regulations would require affected sources that have the potential to emit GHGs in excess of established thresholds to reduce GHG emissions by 25% below 2010 emission levels by 2020. The proposed regulations also assess affected sources an annual fee based on tons per year of GHG emissions, beginning with emissions in calendar year 2012. The proposed DOH GHG rule also tracks the federal “Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule” (GHG Tailoring Rule, see below) and would create new thresholds for GHG emissions from new and existing stationary source facilities. Hawaiian Electric submitted comments on the proposed regulations in January 2013. In October 2013, the DOH announced that it intends to issue a final rule that would change the required emission reduction from 25% to 16% and delay the accrual of GHG emissions fees until after the rule is promulgated, among other changes, but the final rule has not yet been formally approved or released. Hawaiian Electric continues to monitor this rulemaking proceeding and will participate in the further development of the regulations. |
Several approaches (e.g., “cap and trade”) to GHG emission reduction have been either introduced or discussed in the U.S. Congress; however, no federal legislation has yet been enacted. |
On September 22, 2009, the EPA issued its Final Mandatory Reporting of Greenhouse Gases Rule, which requires that sources emitting GHGs above certain threshold levels monitor and report GHG emissions. The Utilities have submitted the required reports for 2010, 2011 and 2012 to the EPA. In December 2009, the EPA made the finding that motor vehicle GHG emissions endanger public health or welfare. Since then, the EPA has also issued rules that begin to address GHG emissions from stationary sources, like the Utilities’ EGUs. |
In June 2010, the EPA issued its GHG Tailoring Rule. Effective January 2, 2011, under the Prevention of Significant Deterioration program, permitting of new or modified stationary sources that have the potential to emit GHGs in greater quantities than the thresholds in the GHG Tailoring Rule will entail GHG emissions evaluation, analysis and, potentially, control requirements. On January 8, 2014, the EPA published in the Federal Register its new proposal for New Source Performance Standards for GHG from new generating units. This proposed rule on GHG from new EGUs does not apply to oil-fired combustion turbines or diesel engine generators, and is not otherwise expected to have significant impacts on the Utilities. President Obama also directed the EPA Administrator to issue proposed standards, regulations, or guidelines for GHG emissions from existing, modified and reconstructed power plants by no later than June 1, 2014, and final standards no later than June 1, 2015. Hawaiian Electric will participate in the federal GHG rulemaking process. The Utilities will continue to evaluate the impact of proposed GHG rules and regulations as they develop. Final regulations may impose significant compliance costs, and may require reductions in fossil fuel use and the addition of renewable energy resources in excess of the requirements of the RPS law. |
While the timing, extent and ultimate effects of climate change cannot be determined with any certainty, climate change is predicted to result in sea level rise, which could potentially impact coastal and other low-lying areas (where much of the Utilities’ electric infrastructure is sited), and could cause erosion of beaches, saltwater intrusion into aquifers and surface ecosystems, higher water tables and increased flooding and storm damage due to heavy rainfall. The effects of climate change on the weather (for example, floods or hurricanes), sea levels, and water availability and quality have the potential to materially adversely affect the results of operations, financial condition and liquidity of the Utilities. For example, severe weather could cause significant harm to the Utilities’ physical facilities. |
The Utilities have taken, and continue to identify opportunities to take, direct action to reduce GHG emissions from their operations, including, but not limited to, supporting DSM programs that foster energy efficiency, using renewable resources for energy production and purchasing power from IPPs generated by renewable resources, burning renewable biodiesel in Hawaiian Electric’s CIP CT-1, using biodiesel for startup and shutdown of selected Maui Electric generating units, and testing biofuel blends in other Hawaiian Electric and Maui Electric generating units. The Utilities are also working with the State of Hawaii and other entities to pursue the use of liquefied natural gas as a cleaner and lower cost fuel to replace, at least in part, the petroleum oil that would otherwise be used. Management is unable to evaluate the ultimate impact on the Utilities’ operations of eventual comprehensive GHG regulation. However, management believes that the various initiatives it is undertaking will provide a sound basis for managing the Utilities’ carbon footprint and meeting GHG reduction goals that will ultimately emerge. |
Maui Electric 2012 test year rate case. On May 31, 2013, the PUC issued a final D&O in the Maui Electric 2012 test year rate case. Final rates became effective August 1, 2013. The final D&O approved an increase in annual revenues of $5.3 million, which is $7.8 million less than the interim increase in annual revenues that had been in effect since June 1, 2012. Reductions from the interim D&O relate primarily to: |
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(in millions) | | | | | | | | | | | | | | | | | | |
Lower ROACE | $ | 4 | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Customer Information System expenses | 0.3 | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Pension and OPEB expense based on 3-year average | 1.5 | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Integrated resource planning expenses | 0.9 | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Operational and Renewable Energy Integration study costs | 1.1 | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Total adjustment | $ | 7.8 | | | | | | | | | | | | | | | | | | |
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According to the PUC, the reduction in the allowed ROACE from the stipulated 10% to the final approved 9% is composed of 0.5% allocation due to updated economic and financial market conditions manifested in lower interest rates in the 2012 test year and 0.5% for system inefficiencies reflected in over curtailment of renewable energy produced by independent power producers. |
The PUC found that the record did not sufficiently support the normalization of 2013 and 2014 Customer Information System costs into the 2012 test year and ordered a downward adjustment to remove these costs from the test year. |
The reduction in the pension and OPEB expense is due to applying a 3-year average in the calculation of pension costs for the purpose of the 2012 test year. This is not a PUC decision to change the pension and OPEB tracking mechanisms, although the PUC emphasizes the need to evaluate alternatives to decrease or limit the growth in employee benefits costs. |
The PUC removed integrated resource planning (IRP) expenses from the test year as it could not determine whether these expenses have been reasonably incurred for the 2012 test year as required by the PUC’s IRP Framework and stated that it will determine the appropriate level and method of cost recovery for Maui Electric’s IRP expenses in the pending IRP proceeding. |
The PUC reduced operational and renewable energy integration study costs because of the uncertainty regarding the scope of work and actual costs of these studies. |
The PUC also continued Maui Electric’s existing energy cost adjustment clause (ECAC) and power purchase adjustment clause (PPAC) design. The PUC stated that it will consider the Utilities' future actions to reduce fuel costs and increase use of renewable energy as it continues to review the design of the ECAC in the future. |
On July 2, 2013, the PUC issued an order denying Maui Electric’s requests for an evidentiary hearing and for partial reconsideration of the final D&O, and dismissed Maui Electric’s motion for partial stay. The order allowed Maui Electric to defer IRP costs incurred since June 2012, which through December 31, 2013 totaled approximately $0.9 million, until the level of costs are determined and a method of recovery is decided in the IRP proceeding. |
Since the final rate increase was lower than the interim increase previously in effect, Maui Electric recorded a charge, net of revenue taxes, of $7.6 million in the second quarter of 2013 and refunded to customers approximately $9.7 million (which includes interest accrued since June 1, 2012) between September 2013 and early November 2013. As a result of the D&O, in the second quarter of 2013 Maui Electric also recorded adjustments to reduce expenses by reducing employee benefits expenses by $1.8 million for adjustments to pension and OPEB costs, and to reclassify $0.7 million of IRP costs to deferred accounts. |
As directed by the PUC, in June 2013 Maui Electric made its curtailment information available to the public on its website and in July 2013 filed documentation regarding the re-setting of its target heat rates to take into account the operation of the Auwahi wind farm. |
In addition, as required by the final D&O, Maui Electric filed in September 2013 a System Improvement and Curtailment Reduction Plan, which identified actions that Maui Electric had already implemented to increase the use of wind energy and further actions that it is committed to implement to benefit customers. In separate filings in October 2013, Maui Electric submitted additional information on the re-setting of its target heat rates and metrics to measure the success of its efforts to reduce or limit curtailment and execute on key actions. In December 2013, Maui Electric filed documentation regarding the re-setting of its target heat rates based on certain operational changes identified in the System Improvement and Curtailment Reduction Plan to be effective in May 2014. Management cannot predict any actions by the PUC as a result of these filings. |
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 obligations to retire plant and equipment, including removal of asbestos and other hazardous materials. |
Changes to the ARO liability included in “Other liabilities” on Hawaiian Electric’s balance sheet were as follows: |
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(in thousands) | 2013 | | 2012 | | | | | | | | | | | | | |
Balance, January 1 | $ | 48,431 | | | $ | 50,871 | | | | | | | | | | | | | | |
| | | | | | | | | | | | |
Accretion expense | 1,263 | | | 1,563 | | | | | | | | | | | | | | |
| | | | | | | | | | | | |
Liabilities incurred | — | | | — | | | | | | | | | | | | | | |
| | | | | | | | | | | | |
Liabilities settled | (5,672 | ) | | (4,003 | ) | | | | | | | | | | | | | |
Revisions in estimated cash flows | (916 | ) | | — | | | | | | | | | | | | | | |
| | | | | | | | | | | | |
Balance, December 31 | $ | 43,106 | | | $ | 48,431 | | | | | | | | | | | | | | |
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Decoupling. In 2010, the PUC issued an order approving decoupling, which was implemented by Hawaiian Electric on March 1, 2011, by Hawaii Electric Light on April 9, 2012 and by Maui Electric on May 4, 2012. Decoupling is a regulatory model that is intended to facilitate meeting the State of Hawaii’s goals to transition to a clean energy economy and achieve an aggressive renewable portfolio standard. The decoupling model implemented in Hawaii delinks revenues from sales and includes annual revenue adjustments for certain O&M expenses and rate base changes. The decoupling mechanism has three components: (1) a sales decoupling component via a revenue balancing account (RBA), (2) a revenue escalation component via a revenue adjustment mechanism (RAM) and (3) an earnings sharing mechanism, which would provide for a reduction of revenues between rate cases in the event the utility exceeds the ROACE allowed in its most recent rate case. Decoupling provides for more timely cost recovery and earning on investments. The implementation of decoupling has resulted in an improvement in the Utilities’ under-earning situation that has existed over the last several years. Prior to and during the transition to decoupling, however, the Utilities’ returns have been below PUC-allowed returns. |
On May 31, 2013, as provided for in its original order issued in 2010 approving decoupling and citing three years of implementation experience for Hawaiian Electric, the PUC opened an investigative docket to review whether the decoupling mechanisms are functioning as intended, are fair to the Utilities and their ratepayers, and are in the public interest. The PUC affirmed its support for the continuation of the sales decoupling (RBA) mechanism and stated its interest in evaluating the RAM to ensure it provides the appropriate balance of risks, costs, incentives and performance requirements, as well as administrative efficiency, and whether the current interest rate applied to the outstanding RBA balance is reasonable. The Utilities and the Consumer Advocate are named as parties to this proceeding and filed a joint statement of position that any material changes to the current decoupling mechanism should be made prospectively after 2016, consistent with the 2013 Agreement, unless the Utilities and the Consumer Advocate mutually agree to the change in this proceeding. The PUC granted several parties’ motions to intervene. In October 2013, the PUC issued orders that bifurcated the proceeding (Schedule A and Schedule B) and identified issues and procedural schedules for both Schedules. The schedule B part of the proceeding is intended to take place over a longer period, with panel hearings scheduled for August 2014. |
Schedule A issues include: |
| | | | | | | | | | | | | | | | | | | | |
• | for the RBA, the reasonableness of the interest rate related to the carrying charge of the outstanding RBA balance and whether there should be a risk sharing adjustment to the RBA; | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
• | for the RAM, whether it is reasonable to true up all actual prior year baseline projects, which are those capital projects less than $2.5 million, at year end or implement alternative methods to calculate the RAM rate base; | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
• | whether a risk sharing mechanism should be incorporated into the RBA; | | | | | | | | | | | | | | | | | | | |
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• | whether performance metrics should be determined and reported; and | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
• | whether other factors should be considered if potential changes to existing RBA and RAM provisions are required. | | | | | | | | | | | | | | | | | | | |
Schedule B issues include: |
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• | whether performance metrics and incentives (rewards or penalties) should be implemented to control costs and encourage the Utilities to make necessary or appropriate changes to strategic and action plans; | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
• | whether the allocation of risk as a result of the decoupling mechanism is fairly reflected in the cost of capital allowed in rates; | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
• | changes or alternatives to the existing RAM; and | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
• | changes to ratemaking procedures to improve efficiency and/or effectiveness. | | | | | | | | | | | | | | | | | | | |
Oral arguments on Schedule A issues were held in January 2014. On February 7, 2014, the PUC issued a D&O on the Schedule A issues, which made certain modifications to the decoupling mechanism. Specifically, the D&O requires: |
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• | An adjustment to the Rate Base RAM Adjustment to include 90% of the amount of the current RAM Period Rate Base RAM Adjustment that exceeds the Rate Base RAM Adjustment from the prior year, to be effective with the Utilities’ 2014 decoupling filing. | | | | | | | | | | | | | | | | | | | |
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• | Effective March 1, 2014, the interest rate to be applied on the outstanding RBA balances to be the short term debt rate used in each Utilities last rate case (ranging from 1.25% to 3.25%), instead of the 6% that has been previously approved. | | | | | | | | | | | | | | | | | | | |
The D&O requires the Utilities to immediately investigate the possibility of deferring the payment of income taxes on the accrued amounts of decoupling revenue, and to report the results with recommendations to the PUC within 120 days. The PUC reserves the right to determine in the next decoupling and rate case filings whether each Utilities’ allowed income taxes should be adjusted for this change. |
The Utilities are required to develop websites to present certain performance metrics first for review by the PUC and the parties and then to the public following PUC approval. |
The Schedule A issues on whether it is reasonable to automatically include all actual prior year capital expenditures on baseline projects in the Rate Base RAM and whether a risk sharing mechanism should be incorporated into the RBA, particularly with respect to the PUC’s concerns regarding maintaining and enhancing the Utilities' incentives to control costs and appropriately allocating risk and compensation for risk, will be addressed in the Schedule B proceedings. |
Management cannot predict the outcome of the proceedings or the ultimate impact of the proceedings on the results of operation of the Utilities. |
Consolidating financial information (unaudited). Hawaiian Electric is not required to provide separate financial statements or other disclosures concerning Hawaii Electric Light and Maui Electric to holders of the 2004 Debentures issued by Hawaii Electric Light and Maui Electric to HECO Capital Trust III (Trust III) since all of their voting capital stock is owned, and their obligations with respect to these securities have been fully and unconditionally guaranteed, on a subordinated basis, by Hawaiian Electric. Consolidating information is provided below for Hawaiian Electric and each of its subsidiaries for the periods ended and as of the dates indicated. |
Hawaiian Electric also 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) and (c) relating to the trust preferred securities of Trust III (see Note 5). 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, 2013 |
|
| | | | | | | | | | | | | | | | | | | | |
(in thousands) | Hawaiian Electric | | Hawaii Electric Light | | Maui Electric | | Other subsidiaries | | Consolidating adjustments | | | Hawaiian Electric |
Consolidated |
Revenues | $ | 2,124,174 | | | 431,517 | | | 424,603 | | | — | | | (122 | ) | [1] | | $ | 2,980,172 | |
|
Expenses | | | | | | | | | | | | |
Fuel oil | 851,365 | | | 125,516 | | | 208,671 | | | — | | | — | | | | 1,185,552 | |
|
Purchased power | 527,839 | | | 128,368 | | | 54,474 | | | — | | | — | | | | 710,681 | |
|
Other operation and maintenance | 283,768 | | | 61,418 | | | 58,081 | | | 3 | | | — | | | | 403,270 | |
|
Depreciation | 99,738 | | | 34,188 | | | 20,099 | | | — | | | — | | | | 154,025 | |
|
Taxes, other than income taxes | 200,962 | | | 40,092 | | | 40,077 | | | — | | | — | | | | 281,131 | |
|
Total expenses | 1,963,672 | | | 389,582 | | | 381,402 | | | 3 | | | — | | | | 2,734,659 | |
|
Operating income (loss) | 160,502 | | | 41,935 | | | 43,201 | | | (3 | ) | | (122 | ) | | | 245,513 | |
|
Allowance for equity funds used during construction | 4,495 | | | 643 | | | 423 | | | — | | | — | | | | 5,561 | |
|
Equity in earnings of subsidiaries | 41,410 | | | — | | | — | | | — | | | (41,410 | ) | [2] | | — | |
|
Interest expense and other charges, net | (39,107 | ) | | (11,341 | ) | | (8,953 | ) | | — | | | 122 | | [1] | | (59,279 | ) |
|
Allowance for borrowed funds used during construction | 1,814 | | | 263 | | | 169 | | | — | | | — | | | | 2,246 | |
|
Income (loss) before income taxes | 169,114 | | | 31,500 | | | 34,840 | | | (3 | ) | | (41,410 | ) | | | 194,041 | |
|
Income taxes | 45,105 | | | 10,830 | | | 13,182 | | | — | | | — | | | | 69,117 | |
|
Net income (loss) | 124,009 | | | 20,670 | | | 21,658 | | | (3 | ) | | (41,410 | ) | | | 124,924 | |
|
Preferred stock dividends of subsidiaries | — | | | 534 | | | 381 | | | — | | | — | | | | 915 | |
|
Net income (loss) attributable to Hawaiian Electric | 124,009 | | | 20,136 | | | 21,277 | | | (3 | ) | | (41,410 | ) | | | 124,009 | |
|
Preferred stock dividends of Hawaiian Electric | 1,080 | | | — | | | — | | | — | | | — | | | | 1,080 | |
|
Net income (loss) for common stock | $ | 122,929 | | | 20,136 | | | 21,277 | | | (3 | ) | | (41,410 | ) | | | $ | 122,929 | |
|
|
Consolidating statement of comprehensive income |
Year ended December 31, 2013 |
|
| | | | | | | | | | | | | | | | | | | | |
(in thousands) | Hawaiian Electric | | Hawaii Electric Light | | Maui Electric | | Other subsidiaries | | Consolidating | | | Hawaiian Electric |
adjustments | Consolidated |
Net income (loss) for common stock | $ | 122,929 | | | 20,136 | | | 21,277 | | | (3 | ) | | (41,410 | ) | | | $ | 122,929 | |
|
Other comprehensive income (loss), net of taxes: | | | | | | | | | | | | |
Retirement benefit plans: | | | | | | | | | | | | | | | | | | |
|
Net gains arising during the period, net of taxes | 203,479 | | | 30,542 | | | 27,919 | | | — | | | (58,461 | ) | [1] | | 203,479 | |
|
Less: amortization of transition obligation, prior service credit and net losses recognized during the period in net periodic benefit cost, net of tax benefits | 20,694 | | | 2,880 | | | 2,557 | | | — | | | (5,437 | ) | [1] | | 20,694 | |
|
Less: reclassification adjustment for impact of D&Os of the PUC included in regulatory assets, net of taxes | (222,595 | ) | | (33,277 | ) | | (30,377 | ) | | — | | | 63,654 | | [1] | | (222,595 | ) |
|
Other comprehensive income, net of taxes | 1,578 | | | 145 | | | 99 | | | — | | | (244 | ) | | | 1,578 | |
|
Comprehensive income (loss) attributable to common shareholder | $ | 124,507 | | | 20,281 | | | 21,376 | | | (3 | ) | | (41,654 | ) | | | $ | 124,507 | |
|
Consolidating statement of income |
Year ended December 31, 2012 |
|
| | | | | | | | | | | | | | | | | | | | |
(in thousands) | Hawaiian Electric | | Hawaii Electric Light | | Maui Electric | | Other subsidiaries | | Consolidating adjustments | | | Hawaiian Electric |
Consolidated |
Revenues | $ | 2,228,233 | | | 441,013 | | | 440,270 | | | — | | | (77 | ) | [1] | | $ | 3,109,439 | |
|
Expenses | | | | | | | | | | | | |
Fuel oil | 945,246 | | | 116,866 | | | 235,307 | | | — | | | — | | | | 1,297,419 | |
|
Purchased power | 540,802 | | | 145,386 | | | 38,052 | | | — | | | — | | | | 724,240 | |
|
Other operation and maintenance | 266,208 | | | 60,447 | | | 70,771 | | | 3 | | | — | | | | 397,429 | |
|
Depreciation | 90,783 | | | 33,337 | | | 20,378 | | | — | | | — | | | | 144,498 | |
|
Taxes, other than income taxes | 209,943 | | | 41,370 | | | 41,528 | | | — | | | — | | | | 292,841 | |
|
Impairment of utility assets | 29,000 | | | 5,500 | | | 5,500 | | | — | | | — | | | | 40,000 | |
|
Total expenses | 2,081,982 | | | 402,906 | | | 411,536 | | | 3 | | | — | | | | 2,896,427 | |
|
Operating income (loss) | 146,251 | | | 38,107 | | | 28,734 | | | (3 | ) | | (77 | ) | | | 213,012 | |
|
Allowance for equity funds used | 5,735 | | | 585 | | | 687 | | | — | | | — | | | | 7,007 | |
during construction |
Equity in earnings of subsidiaries | 28,836 | | | — | | | — | | | — | | | (28,836 | ) | [2] | | — | |
|
Interest expense and other charges, net | (40,842 | ) | | (12,066 | ) | | (9,224 | ) | | | | 77 | | [1] | | (62,055 | ) |
|
Allowance for borrowed funds used during construction | 3,642 | | | 235 | | | 478 | | | — | | | — | | | | 4,355 | |
|
Income (loss) before income taxes | 143,622 | | | 26,861 | | | 20,675 | | | (3 | ) | | (28,836 | ) | | | 162,319 | |
|
Income taxes | 43,266 | | | 10,115 | | | 7,667 | | | — | | | — | | | | 61,048 | |
|
Net income (loss) | 100,356 | | | 16,746 | | | 13,008 | | | (3 | ) | | (28,836 | ) | | | 101,271 | |
|
Preferred stock dividends of subsidiaries | — | | | 534 | | | 381 | | | — | | | — | | | | 915 | |
|
Net income (loss) attributable to Hawaiian Electric | 100,356 | | | 16,212 | | | 12,627 | | | (3 | ) | | (28,836 | ) | | | 100,356 | |
|
Preferred stock dividends of Hawaiian Electric | 1,080 | | | — | | | — | | | — | | | — | | | | 1,080 | |
|
Net income (loss) for common stock | $ | 99,276 | | | 16,212 | | | 12,627 | | | (3 | ) | | (28,836 | ) | | | $ | 99,276 | |
|
|
Consolidating statement of comprehensive income |
Year ended December 31, 2012 |
|
| | | | | | | | | | | | | | | | | | | | |
(in thousands) | Hawaiian Electric | | Hawaii Electric Light | | Maui Electric | | Other subsidiaries | | Consolidating adjustments | | | Hawaiian Electric |
Consolidated |
Net income (loss) for common stock | $ | 99,276 | | | 16,212 | | | 12,627 | | | (3 | ) | | (28,836 | ) | | | $ | 99,276 | |
|
Other comprehensive income (loss), net of taxes: | | | | | | | | | | | | |
Retirement benefit plans: | | | | | | | | | | | | | | | | | | |
|
Net losses arising during the period, net of tax benefits | (90,082 | ) | | (13,577 | ) | | (10,935 | ) | | — | | | 24,512 | | [1] | | (90,082 | ) |
|
Less: amortization of transition obligation, prior service credit and net losses recognized during the period in net periodic benefit cost, net of tax benefits | 13,673 | | | 2,101 | | | 1,771 | | | — | | | (3,872 | ) | [1] | | 13,673 | |
|
Less: reclassification adjustment for impact of D&Os of the PUC included in regulatory assets, net of tax benefits | 75,471 | | | 11,442 | | | 9,093 | | | — | | | (20,535 | ) | [1] | | 75,471 | |
|
Other comprehensive loss, net of tax benefits | (938 | ) | | (34 | ) | | (71 | ) | | — | | | 105 | | | | (938 | ) |
|
Comprehensive income (loss) attributable to common shareholder | $ | 98,338 | | | 16,178 | | | 12,556 | | | (3 | ) | | (28,731 | ) | | | $ | 98,338 | |
|
Consolidating statement of income |
Year ended December 31, 2011 |
|
| | | | | | | | | | | | | | | | | | | | |
(in thousands) | Hawaiian Electric | | Hawaii Electric Light | | Maui Electric | | Other subsidiaries | | Consolidating adjustments | | | Hawaiian Electric |
Consolidated |
Revenues | $ | 2,114,066 | | | 444,891 | | | 419,760 | | | — | | | (27 | ) | [1] | | $ | 2,978,690 | |
|
Expenses | | | | | | | | | | | | |
Fuel oil | 909,172 | | | 121,839 | | | 234,115 | | | — | | | — | | | | 1,265,126 | |
|
Purchased power | 522,503 | | | 137,453 | | | 29,696 | | | — | | | — | | | | 689,652 | |
|
Other operation and maintenance | 266,807 | | | 56,066 | | | 57,202 | | | 9 | | | — | | | | 380,084 | |
|
Depreciation | 89,324 | | | 32,767 | | | 20,884 | | | — | | | — | | | | 142,975 | |
|
Taxes, other than income taxes | 196,170 | | | 41,028 | | | 39,306 | | | — | | | — | | | | 276,504 | |
|
Impairment of utility assets | 9,215 | | | — | | | — | | | — | | | — | | | | 9,215 | |
|
Total expenses | 1,993,191 | | | 389,153 | | | 381,203 | | | 9 | | | — | | | | 2,763,556 | |
|
Operating income (loss) | 120,875 | | | 55,738 | | | 38,557 | | | (9 | ) | | (27 | ) | | | 215,134 | |
|
Allowance for equity funds used | 4,572 | | | 592 | | | 800 | | | — | | | — | | | | 5,964 | |
during construction |
Equity in earnings of subsidiaries | 44,616 | | | — | | | — | | | — | | | (44,616 | ) | [2] | | — | |
|
Interest expense and other charges, net | (37,624 | ) | | (12,554 | ) | | (9,880 | ) | | — | | | 27 | | [1] | | (60,031 | ) |
|
Allowance for borrowed funds used during construction | 1,941 | | | 248 | | | 309 | | | — | | | — | | | | 2,498 | |
|
Income (loss) before income taxes | 134,380 | | | 44,024 | | | 29,786 | | | (9 | ) | | (44,616 | ) | | | 163,565 | |
|
Income taxes | 33,314 | | | 16,839 | | | 11,431 | | | — | | | — | | | | 61,584 | |
|
Net income (loss) | 101,066 | | | 27,185 | | | 18,355 | | | (9 | ) | | (44,616 | ) | | | 101,981 | |
|
Preferred stock dividends of subsidiaries | — | | | 534 | | | 381 | | | — | | | — | | | | 915 | |
|
Net income (loss) attributable to Hawaiian Electric | 101,066 | | | 26,651 | | | 17,974 | | | (9 | ) | | (44,616 | ) | | | 101,066 | |
|
Preferred stock dividends of Hawaiian Electric | 1,080 | | | — | | | — | | | — | | | — | | | | 1,080 | |
|
Net income (loss) for common stock | $ | 99,986 | | | 26,651 | | | 17,974 | | | (9 | ) | | (44,616 | ) | | | $ | 99,986 | |
|
|
Consolidating statement of comprehensive income |
Year ended December 31, 2011 |
|
| | | | | | | | | | | | | | | | | | | | |
(in thousands) | Hawaiian Electric | | Hawaii Electric Light | | Maui Electric | | Other subsidiaries | | Consolidating adjustments | | | Hawaiian Electric |
Consolidated |
Net income (loss) for common stock | $ | 99,986 | | | 26,651 | | | 17,974 | | | (9 | ) | | (44,616 | ) | | | $ | 99,986 | |
|
Other comprehensive income (loss), net of taxes: | | | | | | | | | | | | |
Retirement benefit plans: | | | | | | | | | | | | | | | | | | |
|
Prior service credit arising during the period, net of taxes | 6,921 | | | 1,419 | | | 1,239 | | | — | | | (2,658 | ) | [1] | | 6,921 | |
|
Net losses arising during the period, net of tax benefits | (116,726 | ) | | (18,224 | ) | | (16,816 | ) | | — | | | 35,040 | | [1] | | (116,726 | ) |
|
Less: amortization of transition obligation, prior service credit and net losses recognized during the period in net periodic benefit cost, net of tax benefits | 8,372 | | | 1,324 | | | 1,158 | | | — | | | (2,482 | ) | [1] | | 8,372 | |
|
Less: reclassification adjustment for impact of D&Os of the PUC included in regulatory assets, net of tax benefits | 100,692 | | | 15,436 | | | 14,366 | | | — | | | (29,802 | ) | [1] | | 100,692 | |
|
Other comprehensive loss, net of tax benefits | (741 | ) | | (45 | ) | | (53 | ) | | — | | | 98 | | | | (741 | ) |
|
Comprehensive income (loss) attributable to common shareholder | $ | 99,245 | | | 26,606 | | | 17,921 | | | (9 | ) | | (44,518 | ) | | | $ | 99,245 | |
|
|
Consolidating balance sheet |
December 31, 2013 |
|
| | | | | | | | | | | | | | | | | | | | |
(in thousands) | Hawaiian Electric | | Hawaii Electric Light | | Maui Electric | | Other subsidiaries | | Consolidating | | | Hawaiian Electric |
adjustments | Consolidated |
Assets | | | | | | | | | | | | | | | | | | |
|
Utility plant, at cost | | | | | | | | | | | | | | | | | | |
|
Land | $ | 43,407 | | | 5,460 | | | 3,016 | | | — | | | — | | | | $ | 51,883 | |
|
Plant and equipment | 3,558,569 | | | 1,136,923 | | | 1,006,383 | | | — | | | — | | | | 5,701,875 | |
|
Less accumulated depreciation | (1,222,129 | ) | | (453,721 | ) | | (435,379 | ) | | — | | | — | | | | (2,111,229 | ) |
|
Construction in progress | 124,494 | | | 7,709 | | | 11,030 | | | — | | | — | | | | 143,233 | |
|
Net utility plant | 2,504,341 | | | 696,371 | | | 585,050 | | | — | | | — | | | | 3,785,762 | |
|
Investment in wholly-owned subsidiaries, at equity | 523,674 | | | — | | | — | | | — | | | (523,674 | ) | [2] | | — | |
|
Current assets | | | | | | | | | | | | | | | | | | |
|
Cash and equivalents | 61,245 | | | 1,326 | | | 153 | | | 101 | | | — | | | | 62,825 | |
|
Advances to affiliates | 6,839 | | | 1,000 | | | — | | | — | | | (7,839 | ) | [1] | | — | |
|
Customer accounts receivable, net | 121,282 | | | 28,088 | | | 26,078 | | | — | | | — | | | | 175,448 | |
|
Accrued unbilled revenues, net | 107,752 | | | 17,100 | | | 19,272 | | | — | | | — | | | | 144,124 | |
|
Other accounts receivable, net | 16,373 | | | 4,265 | | | 2,451 | | | — | | | (9,027 | ) | [1] | | 14,062 | |
|
Fuel oil stock, at average cost | 99,613 | | | 14,178 | | | 20,296 | | | — | | | — | | | | 134,087 | |
|
Materials and supplies, at average cost | 37,377 | | | 6,883 | | | 14,784 | | | — | | | — | | | | 59,044 | |
|
Prepayments and other | 29,798 | | | 8,334 | | | 16,140 | | | — | | | (1,415 | ) | [3] | | 52,857 | |
|
Regulatory assets | 54,979 | | | 6,931 | | | 7,828 | | | — | | | — | | | | 69,738 | |
|
Total current assets | 535,258 | | | 88,105 | | | 107,002 | | | 101 | | | (18,281 | ) | | | 712,185 | |
|
Other long-term assets | | | | | | | | | | | | | | | | | | |
|
Regulatory assets | 381,346 | | | 64,552 | | | 60,288 | | | — | | | — | | | | 506,186 | |
|
Unamortized debt expense | 6,051 | | | 1,580 | | | 1,372 | | | — | | | — | | | | 9,003 | |
|
Other | 47,116 | | | 11,352 | | | 15,525 | | | — | | | — | | | | 73,993 | |
|
Total other long-term assets | 434,513 | | | 77,484 | | | 77,185 | | | — | | | — | | | | 589,182 | |
|
Total assets | $ | 3,997,786 | | | 861,960 | | | 769,237 | | | 101 | | | (541,955 | ) | | | $ | 5,087,129 | |
|
Capitalization and liabilities | | | | | | | | | | | | | | | | | | |
|
Capitalization | | | | | | | | | | | | | | | | | | |
|
Common stock equity | $ | 1,593,564 | | | 274,802 | | | 248,771 | | | 101 | | | (523,674 | ) | [2] | | $ | 1,593,564 | |
|
Cumulative preferred stock–not subject to mandatory redemption | 22,293 | | | 7,000 | | | 5,000 | | | — | | | — | | | | 34,293 | |
|
Long-term debt, net | 830,547 | | | 189,998 | | | 186,000 | | | — | | | — | | | | 1,206,545 | |
|
Total capitalization | 2,446,404 | | | 471,800 | | | 439,771 | | | 101 | | | (523,674 | ) | | | 2,834,402 | |
|
Current liabilities | | | | | | | | | | | | | | | | | | |
|
Current portion of long-term debt | — | | | 11,400 | | | — | | | — | | | — | | | | 11,400 | |
|
Short-term borrowings-affiliate | 1,000 | | | — | | | 6,839 | | | — | | | (7,839 | ) | [1] | | — | |
|
Accounts payable | 145,062 | | | 24,383 | | | 20,114 | | | — | | | — | | | | 189,559 | |
|
Interest and preferred dividends payable | 15,190 | | | 3,885 | | | 2,585 | | | — | | | (8 | ) | [1] | | 21,652 | |
|
Taxes accrued | 175,790 | | | 37,899 | | | 37,171 | | | — | | | (1,415 | ) | [3] | | 249,445 | |
|
Regulatory liabilities | 1,705 | | | — | | | 211 | | | — | | | — | | | | 1,916 | |
|
Other | 48,443 | | | 9,033 | | | 15,424 | | | — | | | (9,019 | ) | [1] | | 63,881 | |
|
Total current liabilities | 387,190 | | | 86,600 | | | 82,344 | | | — | | | (18,281 | ) | | | 537,853 | |
|
Deferred credits and other liabilities | | | | | | | | | | | | | | | | | |
|
Deferred income taxes | 359,621 | | | 79,947 | | | 67,593 | | | — | | | — | | | | 507,161 | |
|
Regulatory liabilities | 235,786 | | | 76,475 | | | 35,122 | | | — | | | — | | | | 347,383 | |
|
Unamortized tax credits | 44,931 | | | 14,245 | | | 14,363 | | | — | | | — | | | | 73,539 | |
|
Defined benefit pension and other | 202,396 | | | 28,427 | | | 31,339 | | | — | | | — | | | | 262,162 | |
postretirement benefit plans liability |
Other | 63,374 | | | 14,703 | | | 13,658 | | | — | | | — | | | | 91,735 | |
|
Total deferred credits and other liabilities | 906,108 | | | 213,797 | | | 162,075 | | | — | | | — | | | | 1,281,980 | |
|
Contributions in aid of construction | 258,084 | | | 89,763 | | | 85,047 | | | — | | | — | | | | 432,894 | |
|
Total capitalization and liabilities | $ | 3,997,786 | | | 861,960 | | | 769,237 | | | 101 | | | (541,955 | ) | | | $ | 5,087,129 | |
|
Consolidating balance sheet |
December 31, 2012 |
|
| | | | | | | | | | | | | | | | | | | | |
(in thousands) | Hawaiian Electric | | Hawaii Electric Light | | Maui Electric | | Other subsidiaries | | Consolidating | | | Hawaiian Electric |
adjustments | Consolidated |
Assets | | | | | | | | | | | | | | | | | | |
|
Utility plant, at cost | | | | | | | | | | | | | | | | | | |
|
Land | $ | 43,370 | | | 5,182 | | | 3,016 | | | — | | | — | | | | $ | 51,568 | |
|
Plant and equipment | 3,325,862 | | | 1,086,048 | | | 952,490 | | | — | | | — | | | | 5,364,400 | |
|
Less accumulated depreciation | (1,185,899 | ) | | (433,531 | ) | | (421,359 | ) | | — | | | — | | | | (2,040,789 | ) |
|
Construction in progress | 130,143 | | | 12,126 | | | 9,109 | | | — | | | — | | | | 151,378 | |
|
Net utility plant | 2,313,476 | | | 669,825 | | | 543,256 | | | — | | | — | | | | 3,526,557 | |
|
Investment in wholly-owned subsidiaries, at equity | 497,939 | | | — | | | — | | | — | | | (497,939 | ) | [2] | | — | |
|
Current assets | | | | | | | | | | | | | | | | | | |
|
Cash and equivalents | 8,265 | | | 5,441 | | | 3,349 | | | 104 | | | — | | | | 17,159 | |
|
Advances to affiliates | 9,400 | | | 18,050 | | | — | | | — | | | (27,450 | ) | [1] | | — | |
|
Customer accounts receivable, net | 154,316 | | | 29,772 | | | 26,691 | | | — | | | — | | | | 210,779 | |
|
Accrued unbilled revenues, net | 100,600 | | | 14,393 | | | 19,305 | | | — | | | — | | | | 134,298 | |
|
Other accounts receivable, net | 33,313 | | | 1,122 | | | 3,016 | | | — | | | (9,275 | ) | [1] | | 28,176 | |
|
Fuel oil stock, at average cost | 123,176 | | | 15,485 | | | 22,758 | | | — | | | — | | | | 161,419 | |
|
Materials and supplies, at average cost | 31,779 | | | 5,336 | | | 13,970 | | | — | | | — | | | | 51,085 | |
|
Prepayments and other | 21,708 | | | 5,146 | | | 6,011 | | | — | | | — | | | | 32,865 | |
|
Regulatory assets | 42,675 | | | 4,056 | | | 4,536 | | | — | | | — | | | | 51,267 | |
|
Total current assets | 525,232 | | | 98,801 | | | 99,636 | | | 104 | | | (36,725 | ) | | | 687,048 | |
|
Other long-term assets | | | | | | | | | | | | | | | | | | |
|
Regulatory assets | 601,451 | | | 109,815 | | | 102,063 | | | — | | | — | | | | 813,329 | |
|
Unamortized debt expense | 7,042 | | | 2,066 | | | 1,446 | | | — | | | — | | | | 10,554 | |
|
Other | 46,586 | | | 9,871 | | | 14,848 | | | — | | | — | | | | 71,305 | |
|
Total other long-term assets | 655,079 | | | 121,752 | | | 118,357 | | | — | | | — | | | | 895,188 | |
|
Total assets | $ | 3,991,726 | | | 890,378 | | | 761,249 | | | 104 | | | (534,664 | ) | | | $ | 5,108,793 | |
|
Capitalization and liabilities | | | | | | | | | | | | | | | | | | |
|
Capitalization | | | | | | | | | | | | | | | | | | |
|
Common stock equity | $ | 1,472,136 | | | 268,908 | | | 228,927 | | | 104 | | | (497,939 | ) | [2] | | $ | 1,472,136 | |
|
Cumulative preferred stock–not subject to mandatory redemption | 22,293 | | | 7,000 | | | 5,000 | | | — | | | — | | | | 34,293 | |
|
Long-term debt, net | 780,546 | | | 201,326 | | | 166,000 | | | — | | | — | | | | 1,147,872 | |
|
Total capitalization | 2,274,975 | | | 477,234 | | | 399,927 | | | 104 | | | (497,939 | ) | | | 2,654,301 | |
|
Current liabilities | | | | | | | | | | | | | | | | | | |
|
Short-term borrowings-affiliate | 18,050 | | | — | | | 9,400 | | | — | | | (27,450 | ) | [1] | | — | |
|
Accounts payable | 134,651 | | | 27,457 | | | 24,716 | | | — | | | — | | | | 186,824 | |
|
Interest and preferred dividends payable | 14,479 | | | 4,027 | | | 2,593 | | | — | | | (7 | ) | [1] | | 21,092 | |
|
Taxes accrued | 174,477 | | | 38,778 | | | 37,811 | | | — | | | — | | | | 251,066 | |
|
Regulatory liabilities | 1,212 | | | — | | | — | | | — | | | — | | | | 1,212 | |
|
Other | 45,125 | | | 10,310 | | | 14,634 | | | — | | | (9,268 | ) | [1] | | 60,801 | |
|
Total current liabilities | 387,994 | | | 80,572 | | | 89,154 | | | — | | | (36,725 | ) | | | 520,995 | |
|
Deferred credits and other liabilities | | | | | | | | | | | | | | | | | | |
|
Deferred income taxes | 302,569 | | | 68,479 | | | 46,563 | | | — | | | — | | | | 417,611 | |
|
Regulatory liabilities | 219,303 | | | 67,359 | | | 36,278 | | | — | | | — | | | | 322,940 | |
|
Unamortized tax credits | 39,827 | | | 13,450 | | | 13,307 | | | — | | | — | | | | 66,584 | |
|
Defined benefit pension and other | 459,765 | | | 80,686 | | | 79,754 | | | — | | | — | | | | 620,205 | |
postretirement benefit plans liability |
Other | 68,783 | | | 17,799 | | | 14,055 | | | — | | | — | | | | 100,637 | |
|
Total deferred credits and other liabilities | 1,090,247 | | | 247,773 | | | 189,957 | | | — | | | — | | | | 1,527,977 | |
|
Contributions in aid of construction | 238,510 | | | 84,799 | | | 82,211 | | | — | | | — | | | | 405,520 | |
|
Total capitalization and liabilities | $ | 3,991,726 | | | 890,378 | | | 761,249 | | | 104 | | | (534,664 | ) | | | $ | 5,108,793 | |
|
Consolidating statements of changes in common stock equity |
| |
| | | | | | | | | | | | | | | | | | | | |
(in thousands) | Hawaiian Electric | | Hawaii Electric Light | | Maui Electric | | Other subsidiaries | | Consolidating | | Hawaiian Electric | |
adjustments | Consolidated | |
Balance, December 31, 2010 | $ | 1,334,155 | | | 269,986 | | | 229,651 | | | 91 | | | (499,728 | ) | | $ | 1,334,155 | | |
|
Net income (loss) for common stock | 99,986 | | | 26,651 | | | 17,974 | | | (9 | ) | | (44,616 | ) | | 99,986 | | |
|
Other comprehensive loss, net of tax benefit | (741 | ) | | (45 | ) | | (53 | ) | | — | | | 98 | | | (741 | ) | |
|
Issuance of common stock, net of expenses | 39,999 | | | — | | | — | | | 25 | | | (25 | ) | | 39,999 | | |
|
Common stock dividends | (70,558 | ) | | (16,124 | ) | | (12,004 | ) | | — | | | 28,128 | | | (70,558 | ) | |
|
Balance, December 31, 2011 | $ | 1,402,841 | | | 280,468 | | | 235,568 | | | 107 | | | (516,143 | ) | | $ | 1,402,841 | | |
|
Net income (loss) for common stock | 99,276 | | | 16,212 | | | 12,627 | | | (3 | ) | | (28,836 | ) | | 99,276 | | |
|
Other comprehensive loss, net of tax benefit | (938 | ) | | (34 | ) | | (71 | ) | | — | | | 105 | | | (938 | ) | |
|
Issuance of common stock, net of expenses | 44,001 | | | — | | | — | | | — | | | — | | | 44,001 | | |
|
Common stock dividends | (73,044 | ) | | (27,738 | ) | | (19,197 | ) | | — | | | 46,935 | | | (73,044 | ) | |
|
Balance, December 31, 2012 | $ | 1,472,136 | | | 268,908 | | | 228,927 | | | 104 | | | (497,939 | ) | | $ | 1,472,136 | | |
|
Net income (loss) for common stock | 122,929 | | | 20,136 | | | 21,277 | | | (3 | ) | | (41,410 | ) | | 122,929 | | |
|
Other comprehensive income, net of taxes | 1,578 | | | 145 | | | 99 | | | — | | | (244 | ) | | 1,578 | | |
|
Issuance of common stock, net of expenses | 78,499 | | | — | | | — | | | — | | | — | | | 78,499 | | |
|
Common stock dividends | (81,578 | ) | | (14,387 | ) | | (1,532 | ) | | — | | | 15,919 | | | (81,578 | ) | |
|
Balance, December 31, 2013 | $ | 1,593,564 | | | 274,802 | | | 248,771 | | | 101 | | | (523,674 | ) | | $ | 1,593,564 | | |
|
Consolidating statement of cash flows |
Year ended December 31, 2013 |
|
| | | | | | | | | | | | | | | | | | | | |
(in thousands) | Hawaiian Electric | | Hawaii Electric Light | | Maui Electric | | Other subsidiaries | | Consolidating | | | Hawaiian Electric |
adjustments | Consolidated |
Cash flows from operating activities | | | | | | | | | | | | | | | | | | |
|
Net income (loss) | $ | 124,009 | | | 20,670 | | | 21,658 | | | (3 | ) | | (41,410 | ) | [2] | | $ | 124,924 | |
|
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities | | | | | | | | | | | | | | | | | | |
|
Equity in earnings | (41,510 | ) | | — | | | — | | | — | | | 41,410 | | [2] | | (100 | ) |
|
Common stock dividends received from subsidiaries | 28,505 | | | — | | | — | | | — | | | (28,405 | ) | [2] | | 100 | |
|
Depreciation of property, plant and equipment | 99,738 | | | 34,188 | | | 20,099 | | | — | | | — | | | | 154,025 | |
|
Other amortization | 554 | | | 1,979 | | | 2,544 | | | — | | | — | | | | 5,077 | |
|
Increase in deferred income taxes | 41,409 | | | 10,569 | | | 12,529 | | | — | | | — | | | | 64,507 | |
|
Change in tax credits, net | 5,152 | | | 818 | | | 1,047 | | | — | | | — | | | | 7,017 | |
|
Allowance for equity funds used during construction | (4,495 | ) | | (643 | ) | | (423 | ) | | — | | | — | | | | (5,561 | ) |
|
Change in cash overdraft | — | | | — | | | 1,038 | | | — | | | — | | | | 1,038 | |
|
Changes in assets and liabilities: | | | | | | | | | | | | | | | | | | |
|
Decrease (increase) in accounts receivable | 49,974 | | | (1,459 | ) | | 1,178 | | | — | | | (248 | ) | [1] | | 49,445 | |
|
Decrease (increase) in accrued unbilled revenues | (7,152 | ) | | (2,707 | ) | | 33 | | | — | | | — | | | | (9,826 | ) |
|
Decrease in fuel oil stock | 23,563 | | | 1,307 | | | 2,462 | | | — | | | — | | | | 27,332 | |
|
Increase in materials and supplies | (5,598 | ) | | (1,547 | ) | | (814 | ) | | — | | | — | | | | (7,959 | ) |
|
Increase in regulatory assets | (46,047 | ) | | (9,237 | ) | | (10,177 | ) | | — | | | — | | | | (65,461 | ) |
|
Decrease in accounts payable | (6,136 | ) | | (4,756 | ) | | (9,936 | ) | | — | | | — | | | | (20,828 | ) |
|
Change in prepaid and accrued income taxes and revenue taxes | 4,632 | | | (4,114 | ) | | (2,546 | ) | | — | | | — | | | | (2,028 | ) |
|
Increase (decrease) in defined benefit pension and other postretirement benefit plans liability | 2,325 | | | (1 | ) | | (84 | ) | | — | | | — | | | | 2,240 | |
|
Change in other assets and liabilities | (17,941 | ) | | (6,262 | ) | | (7,544 | ) | | — | | | 248 | | [1] | | (31,499 | ) |
|
Net cash provided by (used in) operating activities | 250,982 | | | 38,805 | | | 31,064 | | | (3 | ) | | (28,405 | ) | | | 292,443 | |
|
Cash flows from investing activities | | | | | | | | | | | | | | | | | | |
|
Capital expenditures | (237,899 | ) | | (52,135 | ) | | (52,451 | ) | | — | | | — | | | | (342,485 | ) |
|
Contributions in aid of construction | 21,686 | | | 7,590 | | | 2,884 | | | — | | | — | | | | 32,160 | |
|
Advances from affiliates | 2,561 | | | 17,050 | | | — | | | — | | | (19,611 | ) | [1] | | — | |
|
Other | — | | | (230 | ) | | — | | | — | | | — | | | | (230 | ) |
|
Investment in consolidated subsidiary | (12,461 | ) | | — | | | — | | | — | | | 12,461 | | [2] | | — | |
|
Net cash used in investing activities | (226,113 | ) | | (27,725 | ) | | (49,567 | ) | | — | | | (7,150 | ) | | | (310,555 | ) |
|
Cash flows from financing activities | | | | | | | | | | | | | | | | | | |
|
Common stock dividends | (81,578 | ) | | (14,388 | ) | | (14,017 | ) | | — | | | 28,405 | | [2] | | (81,578 | ) |
|
Preferred stock dividends of Hawaiian Electric and subsidiaries | (1,080 | ) | | (534 | ) | | (381 | ) | | — | | | — | | | | (1,995 | ) |
|
Proceeds from issuance of common stock | 78,500 | | | | | | 12,461 | | | — | | | (12,461 | ) | [2] | | 78,500 | |
|
Proceeds from issuance of long-term debt | 140,000 | | | 56,000 | | | 40,000 | | | — | | | — | | | | 236,000 | |
|
Repayment of long-term debt | (90,000 | ) | | (56,000 | ) | | (20,000 | ) | | — | | | — | | | | (166,000 | ) |
|
Net decrease in short-term borrowings from non-affiliates and affiliate with original maturities of three months or less | (17,050 | ) | | — | | | (2,561 | ) | | — | | | 19,611 | | [2] | | — | |
|
Other | (681 | ) | | (273 | ) | | (195 | ) | | — | | | — | | | | (1,149 | ) |
|
Net cash provided by (used in) financing activities | 28,111 | | | (15,195 | ) | | 15,307 | | | — | | | 35,555 | | | | 63,778 | |
|
Net increase (decrease) in cash and cash equivalents | 52,980 | | | (4,115 | ) | | (3,196 | ) | | (3 | ) | | — | | | | 45,666 | |
|
Cash and cash equivalents, January 1 | 8,265 | | | 5,441 | | | 3,349 | | | 104 | | | — | | | | 17,159 | |
|
Cash and cash equivalents, December 31 | $ | 61,245 | | | 1,326 | | | 153 | | | 101 | | | — | | | | $ | 62,825 | |
|
Consolidating statement of cash flows |
Year ended December 31, 2012 |
|
| | | | | | | | | | | | | | | | | | | | |
(in thousands) | Hawaiian Electric | | Hawaii Electric Light | | Maui Electric | | Other subsidiaries | | Consolidating | | | Hawaiian Electric |
adjustments | Consolidated |
Cash flows from operating activities | | | | | | | | | | | | | | | | | | |
|
Net income (loss) | $ | 100,356 | | | 16,746 | | | 13,008 | | | (3 | ) | | (28,836 | ) | [2] | | $ | 101,271 | |
|
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities | | | | | | | | | | | | | | | | | | |
|
Equity in earnings | (28,936 | ) | | — | | | — | | | — | | | 28,836 | | [2] | | (100 | ) |
|
Common stock dividends received from subsidiaries | 47,035 | | | — | | | — | | | — | | | (46,935 | ) | [2] | | 100 | |
|
Depreciation of property, plant and equipment | 90,783 | | | 33,337 | | | 20,378 | | | — | | | — | | | | 144,498 | |
|
Other amortization | 1,508 | | | 3,252 | | | 2,238 | | | — | | | — | | | | 6,998 | |
|
Impairment of utility assets | 29,000 | | | 5,500 | | | 5,500 | | | — | | | — | | | | 40,000 | |
|
Increase in deferred income taxes | 66,968 | | | 7,457 | | | 12,453 | | | — | | | — | | | | 86,878 | |
|
Change in tax credits, net | 5,006 | | | 522 | | | 547 | | | — | | | — | | | | 6,075 | |
|
Allowance for equity funds used during construction | (5,735 | ) | | (585 | ) | | (687 | ) | | — | | | — | | | | (7,007 | ) |
|
Changes in assets and liabilities: | | | | | | | | | | | | | | | | | | |
|
Increase in accounts receivable | (48,451 | ) | | (1,106 | ) | | (2,164 | ) | | — | | | 4,717 | | [1] | | (47,004 | ) |
|
Decrease (increase) in accrued unbilled revenues | 2,728 | | | 4,106 | | | (3,306 | ) | | — | | | — | | | | 3,528 | |
|
Decrease in fuel oil stock | 4,861 | | | 3,732 | | | 1,536 | | | — | | | — | | | | 10,129 | |
|
Increase in materials and supplies | (6,683 | ) | | (636 | ) | | (578 | ) | | — | | | — | | | | (7,897 | ) |
|
Increase in regulatory assets | (55,605 | ) | | (9,649 | ) | | (7,147 | ) | | — | | | — | | | | (72,401 | ) |
|
Increase (decrease) in accounts payable | (31,743 | ) | | (8,110 | ) | | 940 | | | — | | | — | | | | (38,913 | ) |
|
Change in prepaid and accrued income taxes and revenue taxes | 19,871 | | | 1,935 | | | 3,433 | | | — | | | — | | | | 25,239 | |
|
Decrease in defined benefit pension and other postretirement benefit plans liability | (434 | ) | | (191 | ) | | (119 | ) | | — | | | — | | | | (744 | ) |
|
Change in other assets and liabilities | (44,880 | ) | | (11,143 | ) | | (12,678 | ) | | (1 | ) | | (4,717 | ) | [1] | | (73,419 | ) |
Net cash provided by (used in) operating activities | 145,649 | | | 45,167 | | | 33,354 | | | (4 | ) | | (46,935 | ) | | | 177,231 | |
|
Cash flows from investing activities | | | | | | | | | | | | | | | | | | |
|
Capital expenditures | (233,792 | ) | | (41,060 | ) | | (35,239 | ) | | — | | | — | | | | (310,091 | ) |
|
Contributions in aid of construction | 32,285 | | | 8,184 | | | 5,513 | | | — | | | — | | | | 45,982 | |
|
Advances from (to) affiliates | (9,400 | ) | | 28,100 | | | 18,500 | | | — | | | (37,200 | ) | [1] | | — | |
|
Net cash used in investing activities | (210,907 | ) | | (4,776 | ) | | (11,226 | ) | | — | | | (37,200 | ) | | | (264,109 | ) |
|
Cash flows from financing activities | | | | | | | | | | | | | | | | | | |
|
Common stock dividends | (73,044 | ) | | (27,738 | ) | | (19,197 | ) | | — | | | 46,935 | | [2] | | (73,044 | ) |
|
Preferred stock dividends of Hawaiian Electric and subsidiaries | (1,080 | ) | | (534 | ) | | (381 | ) | | — | | | — | | | | (1,995 | ) |
|
Proceeds from the issuance of common stock | 44,000 | | | — | | | — | | | — | | | — | | | | 44,000 | |
|
Proceeds from the issuance of long-term debt | 367,000 | | | 31,000 | | | 59,000 | | | — | | | — | | | | 457,000 | |
|
Repayment of long-term debt | (259,580 | ) | | (41,200 | ) | | (67,720 | ) | | — | | | — | | | | (368,500 | ) |
|
Net increase (decrease) in short-term borrowings from non-affiliates and affiliate with original maturities of three months or less | (46,600 | ) | | — | | | 9,400 | | | — | | | 37,200 | | [1] | | — | |
|
Other | (1,992 | ) | | 139 | | | (377 | ) | | — | | | — | | | | (2,230 | ) |
|
Net cash provided by (used in) financing activities | 28,704 | | | (38,333 | ) | | (19,275 | ) | | — | | | 84,135 | | | | 55,231 | |
|
Net increase (decrease) in cash and cash equivalents | (36,554 | ) | | 2,058 | | | 2,853 | | | (4 | ) | | — | | | | (31,647 | ) |
|
Cash and cash equivalents, January 1 | 44,819 | | | 3,383 | | | 496 | | | 108 | | | — | | | | 48,806 | |
|
Cash and cash equivalents, December 31 | $ | 8,265 | | | 5,441 | | | 3,349 | | | 104 | | | — | | | | $ | 17,159 | |
|
Consolidating statement of cash flows |
Year ended December 31, 2011 |
|
| | | | | | | | | | | | | | | | | | | | |
(in thousands) | Hawaiian Electric | | Hawaii Electric Light | | Maui Electric | | Other subsidiaries | | Consolidating | | | Hawaiian Electric |
adjustments | Consolidated |
Cash flows from operating activities | | | | | | | | | | | | | | | | | |
|
Net income (loss) | $ | 101,066 | | | 27,185 | | | 18,355 | | | (9 | ) | | (44,616 | ) | [2] | | $ | 101,981 | |
|
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities | | | | | | | | | | | | | | | | | | |
|
Equity in earnings | (44,716 | ) | | — | | | — | | | — | | | 44,616 | | [2] | | (100 | ) |
|
Common stock dividends received from subsidiaries | 28,228 | | | — | | | — | | | — | | | (28,128 | ) | [2] | | 100 | |
|
Depreciation of property, plant and equipment | 89,324 | | | 32,767 | | | 20,884 | | | — | | | — | | | | 142,975 | |
|
Other amortization | 9,890 | | | 2,528 | | | 4,960 | | | — | | | — | | | | 17,378 | |
|
Impairment of utility assets | 9,215 | | | — | | | — | | | — | | | — | | | | 9,215 | |
|
Increase in deferred income taxes | 38,548 | | | 16,101 | | | 14,442 | | | — | | | — | | | | 69,091 | |
|
Change in tax credits, net | 1,464 | | | 117 | | | 506 | | | — | | | — | | | | 2,087 | |
|
Allowance for equity funds used during construction | (4,572 | ) | | (592 | ) | | (800 | ) | | — | | | — | | | | (5,964 | ) |
|
Change in cash overdraft | — | | | (2,527 | ) | | (161 | ) | | — | | | — | | | | (2,688 | ) |
|
Changes in assets and liabilities: | | | | | | | | | | | | | | | | | | |
|
Increase in accounts receivable | (34,167 | ) | | (2,985 | ) | | (5,663 | ) | | — | | | (1,589 | ) | [1] | | (44,404 | ) |
|
Decrease (increase) in accrued unbilled revenues | (31,616 | ) | | (2,481 | ) | | 655 | | | — | | | — | | | | (33,442 | ) |
|
Increase in fuel oil stock | (6,757 | ) | | (3,466 | ) | | (8,620 | ) | | — | | | — | | | | (18,843 | ) |
|
Increase in materials and supplies | (6,206 | ) | | (202 | ) | | (63 | ) | | — | | | — | | | | (6,471 | ) |
|
Increase in regulatory assets | (31,774 | ) | | (2,025 | ) | | (6,333 | ) | | — | | | — | | | | (40,132 | ) |
|
Increase (decrease) in accounts payable | (34,515 | ) | | 4,391 | | | (5,691 | ) | | — | | | — | | | | (35,815 | ) |
|
Change in prepaid and accrued income taxes and revenue taxes | 51,593 | | | 9,641 | | | 8,502 | | | — | | | — | | | | 69,736 | |
|
Decrease in defined benefit pension and other postretirement benefits plans liability | (20,439 | ) | | (3,241 | ) | | (3,324 | ) | | — | | | — | | | | (27,004 | ) |
|
Change in other assets and liabilities | (17,432 | ) | | (13,124 | ) | | (7,337 | ) | | (2 | ) | | 1,589 | | [1] | | (36,306 | ) |
|
Net cash provided by (used in) operating activities | 97,134 | | | 62,087 | | | 30,312 | | | (11 | ) | | (28,128 | ) | | | 161,394 | |
|
Cash flows from investing activities | | | | | | | | | | | | | | | | | | |
|
Capital expenditures | (160,528 | ) | | (34,230 | ) | | (31,264 | ) | | — | | | — | | | | (226,022 | ) |
|
Contributions in aid of construction | 15,003 | | | 6,271 | | | 2,260 | | | — | | | — | | | | 23,534 | |
|
Advances from (to) affiliates | — | | | (15,200 | ) | | 11,000 | | | — | | | 4,200 | | [1] | | — | |
|
Other | 77 | | | — | | | — | | | — | | | — | | | | 77 | |
|
Investment in consolidated subsidiary | (25 | ) | | — | | | — | | | — | | | 25 | | [2] | | — | |
|
Net cash used in investing activities | (145,473 | ) | | (43,159 | ) | | (18,004 | ) | | — | | | 4,225 | | | | (202,411 | ) |
|
Cash flows from financing activities | | | | | | | | | | | | | | | | | | |
|
Common stock dividends | (70,558 | ) | | (16,124 | ) | | (12,004 | ) | | — | | | 28,128 | | [2] | | (70,558 | ) |
|
Preferred stock dividends of Hawaiian Electric and subsidiaries | (1,080 | ) | | (534 | ) | | (381 | ) | | — | | | — | | | | (1,995 | ) |
|
Proceeds from issuance of common stock | 40,000 | | | — | | | — | | | 25 | | | (25 | ) | [2] | | 40,000 | |
|
Net increase in short-term borrowings from non-affiliates and affiliate with original maturities of three months or less | 4,200 | | | — | | | — | | | — | | | (4,200 | ) | [1] | | — | |
|
Other | (423 | ) | | (116 | ) | | (21 | ) | | — | | | — | | | | (560 | ) |
|
Net cash provided by (used in) financing activities | (27,861 | ) | | (16,774 | ) | | (12,406 | ) | | 25 | | | 23,903 | | | | (33,113 | ) |
|
Net increase (decrease) in cash and cash equivalents | (76,200 | ) | | 2,154 | | | (98 | ) | | 14 | | | — | | | | (74,130 | ) |
|
Cash and cash equivalents, January 1 | 121,019 | | | 1,229 | | | 594 | | | 94 | | | — | | | | 122,936 | |
|
Cash and cash equivalents, December 31 | $ | 44,819 | | | 3,383 | | | 496 | | | 108 | | | — | | | | $ | 48,806 | |
|
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. | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
[3] | Reclassification of accrued income taxes for financial statement presentation. | | | | | | | | | | | | | | | | | | | |