Hawaiian Electric Industries (NYSE:HE) used its fourth-quarter and full-year 2025 earnings call to highlight progress on litigation tied to the 2023 Maui wildfires, ongoing regulatory and legislative initiatives related to wildfire risk, and plans for a higher capital spending cycle in coming years.
Maui wildfire settlement process and related litigation updates
CEO Scott Seu said the company continued executing priorities it outlined after the 2023 Maui wildfires, including advancing the Maui wildfire tort settlement and implementing wildfire safety improvements intended to reduce the risk of ignition from utility equipment.
Management outlined several recent court developments:
- In late December, the Maui Circuit Court granted the company’s motion for summary judgment on subrogation insurers’ direct claims.
- In January, the court granted final approval of the class settlement agreement and provided a good faith settlement determination.
- On Feb. 10, the Hawaii Supreme Court affirmed the lower court’s denial of subrogation insurers’ motion to intervene in the class settlement process. Seu said the decision “ends the insurer’s efforts to derail the class settlement” and “moves us one step closer toward final court approval of the settlement agreements.”
During the Q&A, Seu said the remaining item is an appeal filed in January related to the earlier summary judgment that dismissed insurers’ direct claims. He noted there had been no briefing scheduled yet and declined to speculate on how the Hawaii Supreme Court will act, while adding that prior decisions by the circuit court and the Hawaii Supreme Court “have been very supportive of the settlements.”
Separately, the company said it finalized settlements resolving both the shareholder class action and shareholder derivative lawsuits tied to the Maui wildfires. Seu said binding term sheets were signed in early November, and the agreements were finalized and executed in late December and early January. Management said the company’s obligations under those agreements are fully funded by insurance proceeds.
2025 financial results and liquidity
Executive Vice President and CFO Scott DeGatto reported full-year 2025 net income of $123.1 million, or $0.71 per share, compared to a net loss of approximately $1.4 billion in 2024.
Results included $16.5 million of pre-tax Maui wildfire-related expenses, net of insurance recoveries and deferrals, with approximately $12.6 million recorded at the utility. Results also included $12.4 million of losses related to the strategic review of Pacific Current. Excluding these items, which the company refers to as non-core, consolidated core net income was $149.3 million, or $0.86 per share, compared with core income from continuing operations of $124.3 million, or $0.98 per share, in 2024.
Utility core net income was $177.5 million in 2025 versus $180.7 million in 2024. DeGatto attributed the decline to higher operations and maintenance expenses (primarily from previously deferred consulting and legal fees), higher interest expense, higher depreciation, and the recognition of tax credit benefits in the prior year.
Holding company core net loss improved to $28.2 million from $56.4 million in 2024. DeGatto said the change was driven by lower interest expense following the retirement of holding company debt in April and higher interest income from cash held on the balance sheet for the first settlement payment.
As of the end of the fourth quarter, management said the holding company and the utility had approximately $16 million and $486 million of unrestricted cash, respectively. DeGatto added that the holding company had roughly $530 million in combined liquidity under its at-the-market (ATM) program and credit facility capacity, while the utility had approximately $540 million of liquidity available under its accounts receivable facility and credit facility capacity.
DeGatto also said Hawaiian Electric’s board approved a $10 million quarterly dividend to HEI for the fourth quarter of 2025, consistent with the prior quarter.
Settlement funding and capital spending outlook
The company said there were no changes to its settlement financing plan from what it communicated previously. DeGatto said the company expects to fund the second settlement payment with debt and/or convertible debt, and that payments thereafter are expected to be funded with a mix of debt and equity depending on market conditions.
DeGatto said the first $479 million settlement payment cannot be made until outstanding appeals are resolved, and the company now expects that payment to be made in the second half of 2026.
In response to an analyst question, DeGatto said the company is currently leaning toward using convertible debt for the “relevering” at HEI, though he said plans could change with market conditions. He also said the company does not anticipate taking action on that financing until after the settlement is approved.
On capital spending, management reiterated expected utility capex of $550 million to $700 million in 2026. The company also expects capex to rise further to $600 million to $800 million in 2027 and $600 million to $850 million in 2028, subject to additional Public Utilities Commission (PUC) approvals and further resource adequacy initiatives and analysis.
Regulatory and legislative developments: PBR, wildfire legislation, and securitization
Seu discussed the company’s performance-based regulation (PBR) framework and ongoing work toward a second multi-year rate period. He said HEI is pursuing an alternative rate rebasing process intended to reset rates without the time and cost of a traditional rate case, consistent with PBR principles and a stakeholder-driven approach.
Management said it plans to submit a joint rebasing proposal with stakeholder Ulupono Initiative by March 6. Utility regulatory executive Joe Viola said the commission is expected to take about 30 days to review for administrative completeness before issuing an order to proceed, and that the company would pivot to a traditional 2027 test year rate case if the rebasing proposal were denied.
Management also pointed to potential improvements under the PBR framework to be addressed in a process the PUC has designated as PBR phase 6, including the annual inflationary adjustment and performance incentive mechanisms (PIMs). In Q&A, management described focus areas including a “true-up mechanism” for the inflationary adjustment factor, PIM design so targets and outcomes are within the company’s control, and potentially reducing the number of PIMs. Management also referenced expanding the scope of the Exceptional Project Recovery Mechanism (EPRM).
On wildfire legislation, Seu referenced the “historic” wildfire law signed in July and said the PUC’s Wildfire Fund study was completed at the end of December as a first step. He said work continues to establish a liability cap through a PUC rulemaking process expected to take 18 to 24 months, with details around the Wildfire Fund to be established sometime thereafter. Viola added that in 2026 the key milestones are tied to the PUC rulemaking process and said there is nothing expected to be teed up before the legislature this year.
Seu also said the PUC approved the utility’s three-year wildfire safety strategy in late December and concluded the strategy can be expected to reduce wildfire risk. The company said it has achieved many operational objectives in the strategy ahead of schedule and will submit its next update to the PUC in April.
Looking to financing, Seu said the company is pursuing low-cost financing options to reduce customer impacts from safety and resilience investments, including a planned request in coming months to finance wildfire safety strategy capex and other infrastructure resilience costs via securitization, which he described as typically the lowest cost of capital available for such investments.
Renewables, customer affordability, and leadership transition
Seu said the utility reached a 37% renewable portfolio standard (RPS) in 2025 and remains on track to meet the statutory 40% by 2030 requirement. He also said customer bills remained stable in 2025 despite investments in wildfire safety and resilience, and that the utility provided more than $1 million in payment assistance to working families.
The company also announced an executive transition. Seu said DeGatto’s term as HEI CFO expires April 1, and DeGatto will resign effective April 2. Paul Ito, currently treasurer and CFO of Hawaiian Electric, will become HEI CFO effective April 2, 2026. Seu said DeGatto will continue to support the company as a consultant.
About Hawaiian Electric Industries (NYSE:HE)
Hawaiian Electric Industries, Inc is a diversified holding company operating in the energy and financial services sectors in the state of Hawaii. Its principal subsidiary, Hawaiian Electric Company, provides generation, transmission, distribution and customer service to the island of Oahu, while its Maui Electric and Hawaii Electric Light Company subsidiaries serve Maui, Molokai, Lanai and Hawaii Island. The roots of the electric utility business trace back to 1891 when service first commenced in Honolulu.
Through its subsidiary Hawaii Gas, HEI extends its energy portfolio to include the distribution of natural gas and propane, supporting residential, commercial and industrial customers across the islands.
