Hawaiian Electric Industries HE

NYSE HE

$8.81 -0.09 (-1.01%)

As of: Oct 5, 2026 · 3:59 PM EDT

Hawaiian Electric Industries (HE) stock price is $8.81, down 1.01% on the day, as of Oct 5, 2026. It has a market cap of $1.54Bn and a P/E ratio of 6.86, and is classified in the Regulated Electric Utilities industry (Utilities sector).

Key Stats

Market Cap1.54 Bn

P/E6.86

P/S0.47

Div. Yield0.00

Total Debt (Qtr)2.06 Bn

Revenue Growth (1y) (Qtr)25.90

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About

Hawaiian Electric Industries Inc is a holding company that operates primarily through its electric utility subsidiary, Hawaiian Electric Company, Inc., and its subsidiaries, which provide electric service on the islands of Oahu, Hawaii, and Maui. The company's main business activities involve the generation, purchase, transmission, distribution, and sale of electricity to residential, commercial, and industrial customers across Hawaii. It also engages in renewable energy…

Hawaiian Electric Industries Inc generates revenue primarily from the sale of electricity to customers through its regulated utility operations, which includes revenue from base rates, fuel and purchased power adjustments, and various regulatory mechanisms such as the Annual Revenue Adjustment and Performance Incentive Mechanisms. The company also earns revenue from renewable energy projects, demand response programs, and energy efficiency initiatives. Its customer base consists mainly of individual households, businesses, and government entities throughout the state of Hawaii.

The company operates through the following segments: electric utility and all other.

Electric utility: This segment is responsible for the generation, purchase, transmission, distribution, and sale of electricity on the islands of Oahu, Hawaii, and Maui. It operates five separate grids and serves approximately 95% of the state's population. The segment includes Hawaiian Electric Company, Inc., Hawaii Electric Light Company, Inc., and Maui Electric Company, Limited as its primary operating utilities.
All other: This segment includes the stand-alone corporate operations of Hawaiian Electric Industries Inc, ASB Hawaii, and Pacific Current, along with the results of certain subsidiaries such as GLST1 until its termination in June 2026, and previously held investments in Hamakua Energy and various solar and battery energy storage facilities. Pacific Current's notable subsidiaries have included Mahipapa, which owns a 7.5-MW biomass facility on Kauai, and earlier holdings in Mauo, Alenuihaha Developments, and Ka‘ie‘ie Waho, which developed solar and solar-plus-storage projects across Oahu, Kauai, and the University of Hawaii campuses.

Hawaiian Electric Industries Inc holds a dominant position in Hawaii's electric utility industry as the primary provider of electricity to most of the state's population, operating under a regulated framework that allows it to recover costs and earn a return on investment. The company faces limited direct competition due to the regulated nature of the utility business, but it contends with independent power producers who supply renewable energy under power purchase agreements. Its competitive advantages include its established infrastructure, regulatory relationships, and ongoing investments in renewable energy, grid resilience, and wildfire mitigation.

The company serves a broad customer base that includes residential households, commercial businesses, industrial facilities, and government agencies across the islands of Oahu, Hawaii, and Maui. Specific customer types range from individual homeowners to large resorts, military installations, and public institutions such as schools and hospitals.

Investment Thesis

▲ Bull case

Hawaiian Electric Industries (HEI) is positioned for a resilient recovery and sustainable growth despite near-term headwinds, primarily due to the successful resolution of the Maui wildfire tort settlement and its proactive regulatory strategy. The company made its first $479 million annual payment on April 10, 2026, fulfilling a critical milestone that removed a significant overhang on its balance sheet and credit profile. This payment was funded through a special purpose vehicle, preserving liquidity and demonstrating disciplined capital allocation. Management’s commitment to maintaining investment-grade credit metrics is reinforced by Moody’s recent one-notch upgrade of both the utility (to Ba1) and holding company (to Ba2), signaling improved financial stability. The settlement’s structured payment plan—future payments expected in 2028 and 2029—allows HEI to manage financing opportunistically, leveraging convertible debt or equity based on market conditions, which reduces refinancing risk and supports long-term balance sheet strength. With the wildfire liability overhang largely addressed, HEI can refocus capital and managerial attention on core utility operations and strategic investments that drive regulated earnings growth.
HEI’s rate rebasing proposal, submitted jointly with Ulupono Initiative on March 6, 2026, represents a structural and forward-looking shift in regulatory engagement that could unlock sustainable earnings expansion beyond 2027. The request seeks a 5.3% increase in consolidated base rates, phased over two years ($145 million in 2027, $25 million in 2028), designed to moderate customer bill impacts while allowing recovery of critical investments in safety, reliability, and resilience. This stakeholder-driven, performance-based regulation (PBR)-aligned approach is unprecedented in Hawaii and reflects a maturing regulatory relationship that prioritizes affordability without sacrificing necessary infrastructure spending. Importantly, the proposal includes provisions for up to 200 basis points of performance incentive mechanisms (PIMs)—150 bps of award potential and 50 bps of penalty potential—creating a pathway for earnings upside if operational targets are met. As HEI transitions out of a crisis-management year in 2026, this rebasing process could establish a new, predictable regulatory framework that supports multi-year planning, reduces regulatory lag, and enhances returns on equity through efficient capital deployment and improved service quality.
The approval of the Waial Generating Station repowering project is a transformative catalyst for long-term earnings and grid resilience, with financial recovery mechanisms already secured that minimize near-term earnings dilution. The Public Utilities Commission approved $908 million in cost recovery through the Exceptional Project Recovery Mechanism (EPRM), covering approximately 80% of the project’s estimated cost, with recovery structured to begin as early as 2029 when the first pair of gas turbines enters service. Although management acknowledged potential cost overruns totaling an additional $247 million, the EPRM framework allows for future recovery in a subsequent rate case—expected around 2031—without impacting the current rebasing cycle. Crucially, HEI has already executed turbine purchase contracts to lock in production slots and mitigate inflationary exposure, demonstrating proactive project management. The phased in-service dates (2029, 2031, 2033) mean AFUDC accrual will begin immediately at the utility’s approved weighted average cost of capital (~7.37%), with depreciation and earnings contribution following each turbine pair’s commissioning. This project replaces aging, less efficient generation with flexible, firm capacity that enhances grid stability, supports renewable integration, and reduces reliance on volatile diesel fuel—directly addressing affordability concerns while positioning HEI to meet state decarbonization goals through a reliable, modernized backbone.

Hawaiian Electric Industries (HEI) is positioned for a resilient recovery and sustainable growth despite near-term headwinds, primarily due to the successful resolution of the Maui wildfire tort settlement and its proactive regulatory strategy. The company made its first $479 million annual payment on April 10, 2026, fulfilling a critical milestone that removed a significant overhang on its balance sheet and credit profile. This payment was funded through a special purpose vehicle, preserving liquidity and demonstrating disciplined capital allocation. Management’s commitment to maintaining investment-grade credit metrics is reinforced by Moody’s recent one-notch upgrade of both the utility (to Ba1) and holding company (to Ba2), signaling improved financial stability. The settlement’s structured payment plan—future payments expected in 2028 and 2029—allows HEI to manage financing opportunistically, leveraging convertible debt or equity based on market conditions, which reduces refinancing risk and supports long-term balance sheet strength. With the wildfire liability overhang largely addressed, HEI can refocus capital and managerial attention on core utility operations and strategic investments that drive regulated earnings growth.
HEI’s rate rebasing proposal, submitted jointly with Ulupono Initiative on March 6, 2026, represents a structural and forward-looking shift in regulatory engagement that could unlock sustainable earnings expansion beyond 2027. The request seeks a 5.3% increase in consolidated base rates, phased over two years ($145 million in 2027, $25 million in 2028), designed to moderate customer bill impacts while allowing recovery of critical investments in safety, reliability, and resilience. This stakeholder-driven, performance-based regulation (PBR)-aligned approach is unprecedented in Hawaii and reflects a maturing regulatory relationship that prioritizes affordability without sacrificing necessary infrastructure spending. Importantly, the proposal includes provisions for up to 200 basis points of performance incentive mechanisms (PIMs)—150 bps of award potential and 50 bps of penalty potential—creating a pathway for earnings upside if operational targets are met. As HEI transitions out of a crisis-management year in 2026, this rebasing process could establish a new, predictable regulatory framework that supports multi-year planning, reduces regulatory lag, and enhances returns on equity through efficient capital deployment and improved service quality.
The approval of the Waial Generating Station repowering project is a transformative catalyst for long-term earnings and grid resilience, with financial recovery mechanisms already secured that minimize near-term earnings dilution. The Public Utilities Commission approved $908 million in cost recovery through the Exceptional Project Recovery Mechanism (EPRM), covering approximately 80% of the project’s estimated cost, with recovery structured to begin as early as 2029 when the first pair of gas turbines enters service. Although management acknowledged potential cost overruns totaling an additional $247 million, the EPRM framework allows for future recovery in a subsequent rate case—expected around 2031—without impacting the current rebasing cycle. Crucially, HEI has already executed turbine purchase contracts to lock in production slots and mitigate inflationary exposure, demonstrating proactive project management. The phased in-service dates (2029, 2031, 2033) mean AFUDC accrual will begin immediately at the utility’s approved weighted average cost of capital (~7.37%), with depreciation and earnings contribution following each turbine pair’s commissioning. This project replaces aging, less efficient generation with flexible, firm capacity that enhances grid stability, supports renewable integration, and reduces reliance on volatile diesel fuel—directly addressing affordability concerns while positioning HEI to meet state decarbonization goals through a reliable, modernized backbone.

▼ Bear case

Despite the resolution of the Maui wildfire tort settlement, Hawaiian Electric Industries (HEI) faces persistent and underappreciated financial pressures from escalating wildfire mitigation costs and an unresolved liability cap, which could erode earnings and constrain future growth. While the settlement payments are structured and funded, HEI’s 2026 Wildfire Mitigation Plan (WMP) update—submitted to the PUC in April—reveals ongoing, elevated expenditures aimed at reducing risk across its service territory. Management acknowledged higher O&M expenses in 2026 will significantly outpace inflation, driven in part by increased vegetation management and storm response costs linked to record rainfall and severe weather events in Q1 2026. These recurring resiliency investments, while necessary, represent a structural increase in the utility’s cost base that is not yet fully reflected in rates. More critically, the wildfire liability cap under Act 258 remains subject to ongoing PUC rulemaking, with no formal docket opened as of the May 2026 earnings call. The absence of a defined liability ceiling exposes HEI to potentially catastrophic future losses from another wildfire event, undermining investor confidence and limiting the company’s ability to secure favorable credit terms. Rating agencies, while acknowledging progress, continue to cite the liability cap outcome and wildfire risk reduction as key gating factors for further credit upgrades—meaning HEI remains one notch below investment grade despite the settlement, increasing its cost of capital and constraining financial flexibility.
HEI’s rate rebasing request, while framed as customer-centric and innovative, carries substantial execution risk and may fail to deliver the regulatory certainty or earnings recovery management anticipates, particularly given the novelty of the approach and unresolved stakeholder dynamics. The proposal to rebase rates through a joint initiative with Ulupono Initiative—a nontraditional, stakeholder-driven process—lacks precedent in Hawaii and depends on PUC certification of compliance with the enabling order, which had not been granted as of the May 2026 call. Joe Viola acknowledged the commission had not provided further guidance on the procedural schedule, creating uncertainty around timing and approval likelihood. Furthermore, while PIMs are designed to incentivize performance, their achievability remains questionable; Viola admitted this is an “ongoing discussion” and that lessons from the first PBR period are being used to redesign targets—but until those mechanisms are finalized and proven attainable, the 150 bps of award potential represents speculative upside, not guaranteed earnings. Meanwhile, the utility is absorbing significant O&M pressures in 2026 from higher insurance premiums (tied to deferred wildfire liabilities), cybersecurity investments, labor costs, and storm-related expenses—all of which are pressuring core earnings. If the rebasing is delayed, diluted, or denied, HEI could be forced to absorb these costs without timely recovery, squeezing margins and potentially triggering another round of downward pressure on its already stressed core ROE, which stood at just 6.1% on a non-GAAP basis in Q1 2026 versus 7.4% in the prior year.
The Waial Generating Station repowering project, while approved, introduces significant execution and financial risks that could delay benefits and increase costs beyond current projections, creating a drag on earnings and balance sheet strength. Although HEI secured EPRM recovery for $908 million, management explicitly warned that project costs will exceed this amount due to “significant and unforeseeable cost increases” impacting global power generation, with an incremental $247 million expected to be sought in a future rate case around 2031. This implies a total potential project cost of over $1.15 billion—nearly 36% above the original estimate—raising concerns about cost containment and project management efficacy. More troubling is the phased in-service schedule: the first turbine pair arrives in 2029, but full recovery depends on subsequent filings in 2031 and 2033, meaning AFUDC will accrue for years at the ~7.37% WACC without corresponding revenue recognition, creating a substantial carrying cost on the $247 million unrecovered portion. During this period, HEI must finance the gap through existing liquidity or incremental borrowing, increasing interest expense and leverage. Compounding this risk, the utility is already experiencing working capital strain from fuel price lag effects—paying for fuel delivered in April based on March prices—and while liquidity appears strong (~$1 billion combined), prolonged elevated oil prices from geopolitical conflict could test these reserves. If fuel costs remain high and bad debt rises—as Paul Ito noted could mirror pandemic-era spikes (peaking at 51 bps vs. a typical 10–20 bps range)—the combination of delayed project recovery, carrying costs, and operational pressures could significantly impair cash flow and divert focus from core utility performance.

Despite the resolution of the Maui wildfire tort settlement, Hawaiian Electric Industries (HEI) faces persistent and underappreciated financial pressures from escalating wildfire mitigation costs and an unresolved liability cap, which could erode earnings and constrain future growth. While the settlement payments are structured and funded, HEI’s 2026 Wildfire Mitigation Plan (WMP) update—submitted to the PUC in April—reveals ongoing, elevated expenditures aimed at reducing risk across its service territory. Management acknowledged higher O&M expenses in 2026 will significantly outpace inflation, driven in part by increased vegetation management and storm response costs linked to record rainfall and severe weather events in Q1 2026. These recurring resiliency investments, while necessary, represent a structural increase in the utility’s cost base that is not yet fully reflected in rates. More critically, the wildfire liability cap under Act 258 remains subject to ongoing PUC rulemaking, with no formal docket opened as of the May 2026 earnings call. The absence of a defined liability ceiling exposes HEI to potentially catastrophic future losses from another wildfire event, undermining investor confidence and limiting the company’s ability to secure favorable credit terms. Rating agencies, while acknowledging progress, continue to cite the liability cap outcome and wildfire risk reduction as key gating factors for further credit upgrades—meaning HEI remains one notch below investment grade despite the settlement, increasing its cost of capital and constraining financial flexibility.
HEI’s rate rebasing request, while framed as customer-centric and innovative, carries substantial execution risk and may fail to deliver the regulatory certainty or earnings recovery management anticipates, particularly given the novelty of the approach and unresolved stakeholder dynamics. The proposal to rebase rates through a joint initiative with Ulupono Initiative—a nontraditional, stakeholder-driven process—lacks precedent in Hawaii and depends on PUC certification of compliance with the enabling order, which had not been granted as of the May 2026 call. Joe Viola acknowledged the commission had not provided further guidance on the procedural schedule, creating uncertainty around timing and approval likelihood. Furthermore, while PIMs are designed to incentivize performance, their achievability remains questionable; Viola admitted this is an “ongoing discussion” and that lessons from the first PBR period are being used to redesign targets—but until those mechanisms are finalized and proven attainable, the 150 bps of award potential represents speculative upside, not guaranteed earnings. Meanwhile, the utility is absorbing significant O&M pressures in 2026 from higher insurance premiums (tied to deferred wildfire liabilities), cybersecurity investments, labor costs, and storm-related expenses—all of which are pressuring core earnings. If the rebasing is delayed, diluted, or denied, HEI could be forced to absorb these costs without timely recovery, squeezing margins and potentially triggering another round of downward pressure on its already stressed core ROE, which stood at just 6.1% on a non-GAAP basis in Q1 2026 versus 7.4% in the prior year.
The Waial Generating Station repowering project, while approved, introduces significant execution and financial risks that could delay benefits and increase costs beyond current projections, creating a drag on earnings and balance sheet strength. Although HEI secured EPRM recovery for $908 million, management explicitly warned that project costs will exceed this amount due to “significant and unforeseeable cost increases” impacting global power generation, with an incremental $247 million expected to be sought in a future rate case around 2031. This implies a total potential project cost of over $1.15 billion—nearly 36% above the original estimate—raising concerns about cost containment and project management efficacy. More troubling is the phased in-service schedule: the first turbine pair arrives in 2029, but full recovery depends on subsequent filings in 2031 and 2033, meaning AFUDC will accrue for years at the ~7.37% WACC without corresponding revenue recognition, creating a substantial carrying cost on the $247 million unrecovered portion. During this period, HEI must finance the gap through existing liquidity or incremental borrowing, increasing interest expense and leverage. Compounding this risk, the utility is already experiencing working capital strain from fuel price lag effects—paying for fuel delivered in April based on March prices—and while liquidity appears strong (~$1 billion combined), prolonged elevated oil prices from geopolitical conflict could test these reserves. If fuel costs remain high and bad debt rises—as Paul Ito noted could mirror pandemic-era spikes (peaking at 51 bps vs. a typical 10–20 bps range)—the combination of delayed project recovery, carrying costs, and operational pressures could significantly impair cash flow and divert focus from core utility performance.

Peer group

Peer Comparison

Companies in the Regulated Electric Utilities

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S.No.	Ticker	Company	Market Cap	P/E	P/S	Total Debt (Qtr)
1	ENIC	Enel Chile S.A.	287.73 Bn	217.32	24.79	-
2	NEE	Nextera Energy Inc	160.25 Bn	17.21	5.58	108.46 Bn
3	SO	Southern Co	96.31 Bn	20.44	3.19	75.58 Bn
4	DUK	Duke Energy CORP	88.79 Bn	17.47	2.68	90.25 Bn
5	NGG	National Grid Plc	79.16 Bn	16.82	3.34	-6.27 Bn
6	AEP	American Electric Power Co Inc	65.09 Bn	23.56	2.86	52.84 Bn
7	D	Dominion Energy, Inc	53.95 Bn	21.28	2.98	53.22 Bn
8	HE	Hawaiian Electric Industries Inc	1.54 Bn	6.86	0.47	2.06 Bn

Hawaiian Electric Industries HE

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