Q1 2026 Hawaiian Electric Industries Inc Earnings Call

May 8, 2026

Operator: Ladies and gentlemen, thank you for standing by. My name is Krista, and I will be your conference operator today. At this time, I would like to welcome everyone to HEI Q1 2026 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question at that time, simply press star then 1 on your telephone keypad. If you'd like to withdraw that question, again, press star 1. Thank you. I would now like to turn the conference over to Mateo Garcia, Director of Investor Relations. Please go ahead.

Operator: Ladies and gentlemen, thank you for standing by. My name is Krista, and I will be your conference operator today. At this time, I would like to welcome everyone to HEI Q1 2026 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question at that time, simply press star then 1 on your telephone keypad. If you'd like to withdraw that question, again, press star 1. Thank you. I would now like to turn the conference over to Mateo Garcia, Director of Investor Relations. Please go ahead.

Speaker #2: All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. If you would like to ask a question at that time, simply press star, then the number 1 on your telephone keypad.

Speaker #2: And if you'd like to withdraw that question, again, press star 1. Thank you. I would now like to turn the conference over to Mateo Garcia, Director of Investor Relations. Please go ahead.

Speaker #2: Thank you. Welcome, everyone, to HEI's first quarter 2026 earnings call. Joining me today are Scott Seu, HEI President and CEO; Paul Lito, HEI and Hawaiian Electric Senior Vice President and CFO; Shelley Kimura, Hawaiian Electric President and CEO; and other members of senior management.

Mateo Garcia: Thank you. Welcome everyone to HEI's Q1 2026 Earnings Call. Joining me today are Scott Seu, HEI President and CEO; Paul Ito, HEI and Hawaiian Electric Senior Vice President and CFO; Shelee Kimura, Hawaiian Electric President and CEO, and other members of senior management. Our earnings release and our presentation for this call are available in the investor relations section of our website. As a reminder, forward-looking statements will be made on today's call. Factors that could cause actual results to differ materially from expectations can be found in our presentation, our SEC filings, and in the investor relations section of our website. Today's presentation also includes references to non-GAAP financial measures, including those referred to as core items. You should refer to the information contained in the slides accompanying today's presentation for definitional information and reconciliations of historical non-GAAP measures to the closest GAAP financial measure.

Mateo Garcia: Thank you. Welcome everyone to HEI's Q1 2026 earnings call. Joining me today are Scott Seu, HEI President and CEO; Paul Ito, HEI and Hawaiian Electric Senior Vice President and CFO; Shelee Kimura, Hawaiian Electric President and CEO, and other members of senior management. Our earnings release and our presentation for this call are available in the investor relations section of our website. As a reminder, forward-looking statements will be made on today's call. Factors that could cause actual results to differ materially from expectations can be found in our presentation, our SEC filings, and in the investor relations section of our website. Today's presentation also includes references to non-GAAP financial measures, including those referred to as core items. You should refer to the information contained in the slides accompanying today's presentation for definitional information and reconciliations of historical non-GAAP measures to the closest GAAP financial measure.

Speaker #2: Our earnings release and our presentation for this call are available in the Investor Relations section of our website. As a reminder, forward-looking statements will be made on today's call.

Speaker #2: Factors that could cause actual results to differ materially from expectations can be found in our presentation, our SEC filings, and in the Investor Relations section of our website.

Speaker #2: Today's presentation also includes references to non-GAAP financial measures, including those referred to as core items. You should refer to the information contained in the slides accompanying today's presentation for definitional information, and reconciliations of historical non-GAAP measures to the closest GAAP financial measure.

Speaker #2: We will take questions from institutional investors at the end of this call. Individual investors and others can reach out to Investor Relations. Now, Scott Seu will begin with his remarks.

Mateo Garcia: We will take questions from institutional investors at the end of this call. Individual investors and others can reach out to investor relations. Now Scott Seu will begin with his remarks.

Speaker #3: Aloha kākou. Welcome, everyone. For today's call, I'll start with an update on the Maui wildfire tort settlement and discuss our progress on other key priorities.

Scott Seu: Aloha kakou. Welcome, everyone. For today's call, I'll start with an update on the Maui wildfire tort settlement and discuss our progress on other key priorities. Paul Ito will walk through our financial results and then open it up for questions. Since the Maui wildfires in 2023, we've told you we would take the actions necessary to offer those who suffered loss an accelerated path to recovery and to regain the financial strength and stability of our enterprise. Resolving the Maui wildfire tort litigation was a fundamental step in this process. We came to key terms of a comprehensive settlement agreement in August of 2024 and signed on to a definitive settlement agreement shortly thereafter. Last month, on 10 April, the final conditions of the settlement were satisfied when the last subrogation insurers withdrew their appeals.

Scott Seu: [Foreign Language]. Welcome, everyone. For today's call, I'll start with an update on the Maui wildfire tort settlement and discuss our progress on other key priorities. Paul Ito will walk through our financial results and then open it up for questions. Since the Maui wildfires in 2023, we've told you we would take the actions necessary to offer those who suffered loss an accelerated path to recovery and to regain the financial strength and stability of our enterprise. Resolving the Maui wildfire tort litigation was a fundamental step in this process. We came to key terms of a comprehensive settlement agreement in August of 2024 and signed on to a definitive settlement agreement shortly thereafter. Last month, on 10 April, the final conditions of the settlement were satisfied when the last subrogation insurers withdrew their appeals.

Speaker #3: Paul Ito will walk through our financial results and then open it up for questions. Since the Maui wildfires in 2023, we've told you we would take the actions necessary to offer those who suffered loss an accelerated path to recovery and to regain the financial strength and stability of our enterprise.

Speaker #3: Resolving the Maui wildfire tort litigation was a fundamental step in this process. We came to key terms of a comprehensive settlement agreement in August 2024 and signed on to a definitive settlement agreement shortly thereafter.

Speaker #3: Last month, on April 10th, the final conditions of the settlement were satisfied when the last subrogation insurers withdrew their appeals. We then immediately made the first of our four annual $479 million payments, as stipulated under the agreement.

David Brown: We immediately made the first of our four annual $479 million payments as stipulated under the agreement. I'm grateful to all parties involved that we were able to work through an extremely complex and challenging process and begin compensating those who suffered loss. This marks a pivotal milestone for those who were impacted by the Maui wildfires. Our hearts are with them as they continue on their journey of healing and recovery. While we've advanced the wildfire settlement agreement, we've worked in parallel to reduce wildfire risk across our communities as quickly as possible. Our utility teams continue to work with urgency toward reducing wildfire risk and strengthening the resilience of our grid. On 13 April, we submitted our first update to our Wildfire Mitigation Plan, or WMP, to the Public Utilities Commission, which covers 2026 and 2027.

Scott Seu: We immediately made the first of our four annual $479 million payments as stipulated under the agreement. I'm grateful to all parties involved that we were able to work through an extremely complex and challenging process and begin compensating those who suffered loss. This marks a pivotal milestone for those who were impacted by the Maui wildfires. Our hearts are with them as they continue on their journey of healing and recovery. While we've advanced the wildfire settlement agreement, we've worked in parallel to reduce wildfire risk across our communities as quickly as possible. Our utility teams continue to work with urgency toward reducing wildfire risk and strengthening the resilience of our grid. On 13 April, we submitted our first update to our Wildfire Mitigation Plan, or WMP, to the Public Utilities Commission, which covers 2026 and 2027.

Speaker #3: I'm grateful to all parties involved that we were able to work through an extremely complex and challenging process and begin compensating those who suffered loss.

Speaker #3: This marks a pivotal milestone for those who were impacted by the Maui wildfires, and our hearts are with them as they continue on their journey of healing and recovery.

Speaker #3: While we've advanced the wildfire settlement agreement, we've worked in parallel to reduce wildfire risk across our communities as quickly as possible. Our utility teams continue to work with urgency toward reducing wildfire risk and strengthening the resilience of our grid.

Speaker #3: On April 13, we submitted our first update to our Wildfire Mitigation Plan, or WMP, to the Public Utilities Commission, which covers 2026 and 2027.

Speaker #3: In accordance with the PUC's approval of our WMP at the end of 2025, we'll continue to submit updated WMPs every other year starting in 2027, with each update covering a two-year period.

David Brown: In accordance with the PUC's approval of our WMP at the end of 2025, we'll continue to submit updated WMPs every other year starting in 2027, with each update covering a 2-year period. This schedule will foster a predictable, deliberate approach toward planning and implementing our wildfire risk reduction measures. Proactive risk management and continuous improvement will continue to define our approach as we move forward. Turning to the next slide. Affordability is a core focus of ours. Affordability pressures have intensified given the recent increase in fuel prices across the globe. We've always been committed to supporting our communities during times of uncertainty. We've displayed this commitment during the pandemic, the Maui wildfires, and in the current period of high oil prices.

Scott Seu: In accordance with the PUC's approval of our WMP at the end of 2025, we'll continue to submit updated WMPs every other year starting in 2027, with each update covering a two-year period. This schedule will foster a predictable, deliberate approach toward planning and implementing our wildfire risk reduction measures. Proactive risk management and continuous improvement will continue to define our approach as we move forward. Turning to the next slide. Affordability is a core focus of ours. Affordability pressures have intensified given the recent increase in fuel prices across the globe. We've always been committed to supporting our communities during times of uncertainty. We've displayed this commitment during the pandemic, the Maui wildfires, and in the current period of high oil prices.

Speaker #3: This schedule will foster a predictable, deliberate approach toward planning and implementing our wildfire risk reduction measures. Proactive risk management and continuous improvement will continue to define our approach as we move forward.

Speaker #3: Turning to the next slide, affordability is a core focus of ours, and affordability pressures have intensified given the recent increase in fuel prices across the globe.

Speaker #3: We've always been committed to supporting our communities during times of uncertainty, and we've displayed this commitment during the pandemic, the Maui wildfires, and in the current period of high oil prices.

Speaker #3: In early April, we told our customers to prepare for potential increases in energy costs in the coming months, driven by rising global oil prices linked to escalating geopolitical tension.

David Brown: In early April, we told our customers to prepare for potential increases in energy costs in the coming months, driven by rising global oil prices linked to escalating geopolitical tension. We also rolled out new options to support our customers through this challenging time. Starting April 6, we began offering customers options that can smooth short-term billing spikes and provide additional financial flexibility. These include interest-free payment plans for up to 6 months and $50 bill credits to customers in areas that rely more heavily on diesel fuel generation, which has seen the largest increase in fuel costs. As we work to help customers through this higher cost period, we continue to advance strategies that systemically address household energy burden. This includes supporting electrification, rooftop solar, and EV adoption, all of which have contributed to an average household energy burden in Hawaii that is below the national average.

Scott Seu: In early April, we told our customers to prepare for potential increases in energy costs in the coming months, driven by rising global oil prices linked to escalating geopolitical tension. We also rolled out new options to support our customers through this challenging time. Starting April, we began offering customers options that can smooth short-term billing spikes and provide additional financial flexibility. These include interest-free payment plans for up to 6 months and $50 bill credits to customers in areas that rely more heavily on diesel fuel generation, which has seen the largest increase in fuel costs. As we work to help customers through this higher cost period, we continue to advance strategies that systemically address household energy burden. This includes supporting electrification, rooftop solar, and EV adoption, all of which have contributed to an average household energy burden in Hawaii that is below the national average.

Speaker #3: We also rolled out new options to support our customers through this challenging time. Starting April 6, we began offering customers options that can smooth short-term billing spikes and provide additional financial flexibility.

Speaker #3: These include interest-free payment plans for up to six months, and $50 bill credits to customers in areas that rely more heavily on diesel fuel generation, which has seen the largest increase in fuel costs.

Speaker #3: As we work to help customers through this higher-cost period, we continue to advance strategies that systemically address household energy burden. This includes supporting electrification, rooftop solar, and EV adoption.

Speaker #3: All of which have contributed to an average household energy burden in Hawaii that is below the national average. We also believe we're well-positioned as a company to navigate the impacts from the sharp rise in fuel costs.

David Brown: We also believe we're well-positioned as a company to navigate the impacts from the sharp rise in fuel costs. Paul will talk more about our strong liquidity position, but I'll note that our prudent balance sheet management ensures we're well prepared for the unexpected. Current global events highlight the importance of a diversified energy mix to limit the impact of geopolitical instability and price volatility. Reducing customer bill volatility is one of the many reasons we've supported adding renewable energy, such as solar plus storage, to our grids. Renewables not only contribute to our state's renewable energy and decarbonization goals, they also increase bill stability. Turning to the next slide. We're in a transitional year as we prepare for our expected reset of rates in 2027.

Scott Seu: We also believe we're well-positioned as a company to navigate the impacts from the sharp rise in fuel costs. Paul will talk more about our strong liquidity position, but I'll note that our prudent balance sheet management ensures we're well prepared for the unexpected. Current global events highlight the importance of a diversified energy mix to limit the impact of geopolitical instability and price volatility. Reducing customer bill volatility is one of the many reasons we've supported adding renewable energy, such as solar plus storage, to our grids. Renewables not only contribute to our state's renewable energy and decarbonization goals, they also increase bill stability. Turning to the next slide. We're in a transitional year as we prepare for our expected reset of rates in 2027.

Speaker #3: Paul will talk more about our strong liquidity position, but I'll note that our prudent balance sheet management ensures we're well prepared for the unexpected. Current global events highlight the importance of a diversified energy mix to limit the impact of geopolitical instability and price volatility.

Speaker #3: Reducing customer bill volatility is one of the many reasons we've supported adding renewable energy, such as solar plus storage, to our grids. Renewables not only contribute to our state's renewable energy and decarbonization goals, they also increase bill stability.

Speaker #3: Turning to the next slide, we're in a transitional year as we prepare for our expected reset of rates in 2027. On March 6, we submitted our rate rebasing requests jointly with Ulupono Initiative, an intervener in many of our PUC proceedings and a working group party in performance-based regulation.

David Brown: On 6 March, we submitted our rate rebasing requests jointly with Ulupono Initiative, an intervener in many of our PUC proceedings and a working group party in Performance-Based Regulation. This joint proposal advances an unprecedented stakeholder-driven, non-traditional approach to utility rate adjustment. The approach is consistent with the fundamental principles of PBR, which encourages innovation and the evolution of utility regulation. Our request prioritizes customer affordability while allowing the utility to undertake the investments and expenses that are critical to safety, reliability, and resilience. Our proposed rebasing would increase consolidated base rates by approximately 5.3%, phased in over 2 years to moderate customer impacts. This equates to an increase in the average customer bill of $8 to 12 in 2027, and then an additional $2 to 3 in 2028, varying slightly by island.

Scott Seu: On 6 March, we submitted our rate rebasing requests jointly with Ulupono Initiative, an intervener in many of our PUC proceedings and a working group party in Performance-Based Regulation. This joint proposal advances an unprecedented stakeholder-driven, non-traditional approach to utility rate adjustment. The approach is consistent with the fundamental principles of PBR, which encourages innovation and the evolution of utility regulation. Our request prioritizes customer affordability while allowing the utility to undertake the investments and expenses that are critical to safety, reliability, and resilience. Our proposed rebasing would increase consolidated base rates by approximately 5.3%, phased in over 2 years to moderate customer impacts. This equates to an increase in the average customer bill of $8 to 12 in 2027, and then an additional $2 to 3 in 2028, varying slightly by island.

Speaker #3: This joint proposal advances an unprecedented stakeholder-driven, non-traditional approach to utility rate adjustment. The approach is consistent with the fundamental principles of PBR, which encourages innovation and the evolution of utility regulation.

Speaker #3: Our request prioritizes customer affordability while allowing the utility to undertake the investments and expenses that are critical to safety, reliability, and resilience. Our proposed rebasing would increase consolidated base rates by approximately 5.3%, phased in over two years to moderate customer impacts.

Speaker #3: This equates to an increase in the average customer bill of $8 to $12 in 2027, and then an additional $2 to $3 in 2028, varying slightly by island.

Speaker #3: The requested increase could also help improve what we expect will continue to be impacted in this year of transition as we prepare to enter our second multi-year rate period.

David Brown: The requested increase could also help improve our return on equity, which we expect will continue to be impacted in this year of transition as we prepare to enter our second multi-year rate period. Paul will discuss our expectations for 2026 in more detail. Performance Incentive Mechanisms, or PIMs, are also an essential element of PBR. Although development of PIMs for the second multi-year rate period has not yet been completed, our joint proposal recommends that a total of 200 basis points of PIMs be available, composed of 150 basis points of award potential and 50 basis points of penalty potential. Affordability is fundamental to our regulatory framework, and by the end of our current multi-year rate period, we'll have provided more than $100 million in revenue requirement reductions to customers.

Scott Seu: The requested increase could also help improve our return on equity, which we expect will continue to be impacted in this year of transition as we prepare to enter our second multi-year rate period. Paul will discuss our expectations for 2026 in more detail. Performance Incentive Mechanisms, or PIMs, are also an essential element of PBR. Although development of PIMs for the second multi-year rate period has not yet been completed, our joint proposal recommends that a total of 200 basis points of PIMs be available, composed of 150 basis points of award potential and 50 basis points of penalty potential. Affordability is fundamental to our regulatory framework, and by the end of our current multi-year rate period, we'll have provided more than $100 million in revenue requirement reductions to customers.

Speaker #3: Paul will discuss our expectations for 2026 in more detail. Performance incentive mechanisms, or PIMs, are also an essential element of PBR, and although development of PIMs for the second multi-year rate period has not yet been completed, our joint proposal recommends that a total of 200 basis points of PIMs be available, composed of 150 basis points of award potential and 50 basis points of penalty potential.

Speaker #3: Affordability is fundamental to our regulatory framework, and by the end of our current multi-year rate period, we'll have provided more than $100 million in revenue requirement reductions to customers.

Speaker #3: As we implement any approved rate rebasing in our second multi-year rate period, we'll continue working with our customers to provide options to address affordability pressures.

David Brown: As we implement any approved rate rebasing in our second multi-year rate period, we'll continue working with our customers to provide options to address affordability pressures. Turning to an update on Waiau. In late March, the PUC issued a decision and order approving our proposed Waiau Generating Station repowering project, which had been selected in December 2023 after a competitive bidding process. This is a milestone approval, allowing us to move ahead with a critically important firm generation project that will enhance energy reliability and resilience for our customers. The commission approved cost recovery through our Exceptional Project Recovery Mechanism, or EPRM, totaling $908 million. This amount includes the original estimated project cost of $847 million plus an adjustment for inflation.

Scott Seu: As we implement any approved rate rebasing in our second multi-year rate period, we'll continue working with our customers to provide options to address affordability pressures. Turning to an update on Waiau. In late March, the PUC issued a decision and order approving our proposed Waiau Generating Station repowering project, which had been selected in December 2023 after a competitive bidding process. This is a milestone approval, allowing us to move ahead with a critically important firm generation project that will enhance energy reliability and resilience for our customers. The commission approved cost recovery through our Exceptional Project Recovery Mechanism, or EPRM, totaling $908 million. This amount includes the original estimated project cost of $847 million plus an adjustment for inflation.

Speaker #3: Turning to an update on Waiao, in late March, the PUC issued a decision and order approving our proposed Waiao generating station repowering project, which had been selected in December 2023 after a competitive bidding process.

Speaker #3: This is a milestone approval, allowing us to move ahead with a critically important firm generation project that will enhance energy reliability and resilience for our customers.

Speaker #3: The Commission approved cost recovery through our exceptional project recovery mechanism, or EPRM, totaling $908 million. This amount includes the original estimated project cost of $847 million, plus an adjustment for inflation.

Speaker #3: We do foresee project costs will exceed this amount, since, as many of you know, there have been significant and unforeseeable cost increases that have impacted power generation projects worldwide over the two years since our original cost estimate.

David Brown: We do foresee project costs will exceed this amount since, as many of you know, there have been significant and unforeseeable cost increases that have impacted power generation projects worldwide over the two years since our original cost estimate. However, the commission has confirmed that we may seek recovery above the currently approved amount in a future rate case or rate rebasing proceeding, which may be in 2031. Including the inflationary adjustment that we'll recover through the EPRM, the projected incremental amount we'll seek recovery for after the project is in service totals $247 million. At the end of April, following the PUC's approval, we executed contracts for the purchase of 6 gas turbines for the Waiau project to secure production slots and remove exposure to non-tariff price increases.

Scott Seu: We do foresee project costs will exceed this amount since, as many of you know, there have been significant and unforeseeable cost increases that have impacted power generation projects worldwide over the two years since our original cost estimate. However, the commission has confirmed that we may seek recovery above the currently approved amount in a future rate case or rate rebasing proceeding, which may be in 2031. Including the inflationary adjustment that we'll recover through the EPRM, the projected incremental amount we'll seek recovery for after the project is in service totals $247 million. At the end of April, following the PUC's approval, we executed contracts for the purchase of 6 gas turbines for the Waiau project to secure production slots and remove exposure to non-tariff price increases.

Speaker #3: However, the Commission has confirmed that we may seek recovery above the currently approved amount in a future rate case or rate rebasing proceeding, which may be in 2031.

Speaker #3: Including the inflationary adjustment that will recover through the EPRM, the projected incremental amount we will seek recovery for after the project is in service totals $247 million.

Speaker #3: At the end of April, following the PUC's approval, we executed contracts for the purchase of six gas turbines for the WAIAO project to secure production slots and remove exposure to non-tariff price increases.

Speaker #3: In summary, we expect 2026 to be a year of transition now that we've reached the pivotal milestones of finalizing the tort litigation settlement and launching our alternative rate rebasing process.

David Brown: In summary, we expect 2026 to be a year of transition now that we've reached the pivotal milestones of finalizing the tort litigation settlement and launching our alternative rate rebasing process. We're no longer navigating a crisis. We're strengthening our foundation while working to build a safer, more resilient future for the communities we serve. Our focus going forward will continue to be on the critical processes underway with key stakeholders, including the liability cap rulemaking and rate rebasing processes underway with the Commission and executing well on our Waiau repowering project. We'll continue to be laser-focused on affordability and supporting our customers and communities, especially given fuel price impacts from the Iran conflict. I'll now turn the call over to Paul Ito to discuss our financial results.

Scott Seu: In summary, we expect 2026 to be a year of transition now that we've reached the pivotal milestones of finalizing the tort litigation settlement and launching our alternative rate rebasing process. We're no longer navigating a crisis. We're strengthening our foundation while working to build a safer, more resilient future for the communities we serve. Our focus going forward will continue to be on the critical processes underway with key stakeholders, including the liability cap rulemaking and rate rebasing processes underway with the Commission and executing well on our Waiau repowering project. We'll continue to be laser-focused on affordability and supporting our customers and communities, especially given fuel price impacts from the Iran conflict. I'll now turn the call over to Paul Ito to discuss our financial results.

Speaker #3: We're no longer navigating a crisis. We're strengthening our foundation while working to build a safer, more resilient future for the communities we serve. Our focus going forward will continue to be on the critical processes underway with key stakeholders, including the liability cap rulemaking and rate rebasing processes underway with the Commission, and executing well on our WAIAO repowering project.

Speaker #3: We'll continue to be laser-focused on affordability and supporting our customers and communities, especially given fuel price impacts from the Iran conflict. I'll now turn the call over to Paul Itto to discuss our financial results.

Speaker #2: Thank you, Scott. I'll start with our financial results on slide 7. For the first quarter of 2026, we generated net income of $30.5 million, or $0.18 per share, compared to $26.7 million, or $0.15 per share, in the same quarter of 2025.

Paul Ito: Thank you, Scott. I'll start with our financial results on slide 7. For Q1 2026, we generated net income of $30.5 million or $0.18 per share, compared to $26.7 million or $0.15 per share in Q1 2025. The results include less than $1 million of pre-tax Maui wildfire-related expenses, net of insurance recoveries and deferrals. This is down considerably from roughly $4.5 million in Q1 of last year. Excluding the Maui wildfire-related expenses and excluding last year's losses from our strategic review of Pacific Current, which we refer to as non-core, consolidated core net income and EPS were $31 million and $0.18, down from $39.8 million and $0.23 in Q1 2025.

Speaker #2: The result includes less than a million of pre-tax Maui wildfire-related expenses, net of insurance recoveries and deferrals. This is down considerably from roughly $4.5 million in the same quarter of last year.

Speaker #2: Excluding the Maui wildfire-related expenses and excluding last year's losses from our strategic review of Pacific Current, which we refer to as non-core, consolidated core net income and EPS were $31 million and $0.18, down from $39.8 million and $0.23 in the first quarter of 2025.

Speaker #2: Utility coordinate income for the quarter was $35.7 million, compared to $49.7 million in 2025. There were unprecedented heavy rains and damaging wind events from February through March, requiring 35 days of emergency response by the utility.

Paul Ito: Utility core net income for the quarter was $35.7 million compared to $49.7 million in 2025. There were unprecedented heavy rains and damaging wind events from February through March, requiring 35 days of emergency response by the utility. Kona Low storms in March caused massive flooding across multiple islands with an estimated $2 billion in damages, resulting in President Trump issuing a federal disaster declaration in early April. The decrease in utility net income primarily reflects higher O&M expenses from the quarter's severe weather. We also saw higher O&M expenses due to higher insurance costs, primarily related to the deferral of wildfire liability premiums in 2025. Interest expense was also higher compared to last year due to the $500 million high-yield debt issuance last September.

Speaker #2: Kona Low storms in March caused massive flooding across multiple islands, with an estimated $2 billion in damages, resulting in President Trump issuing a federal disaster declaration in early April.

Speaker #2: The decrease in utility net income primarily reflects higher O&M expenses from the quarter's severe weather. We also saw higher O&M expenses due to higher insurance costs, primarily related to the deferral of wildfire liability premiums in 2025.

Speaker #2: Interest expense was also higher compared to last year, due to the $500 million high-yield debt issuance last September. Holding company core net loss for the quarter was $4.8 million, compared to $9.9 million in 2025.

Paul Ito: Holding company core net loss for the quarter was $4.8 million compared to $9.9 million in 2025. The lower core net loss was driven by lower interest expense due to the lower debt balance following the retirement of holding company debt in April of last year. Turning to the next slide, as of the end of Q1, the holding company and the utility had approximately $10 million and $437 million of unrestricted cash on hand, respectively. In addition, the holding company has approximately $535 million in combined liquidity available under its ATM program and credit facility capacity. The utility also has approximately $518 million of liquidity available under its accounts receivable facility and credit facility capacity.

Speaker #2: The lower core net loss was driven by lower interest expense due to the lower debt balance following the retirement of holding company debt in April of last year.

Speaker #2: Turning to the next slide, as of the end of the first quarter, the holding company and the utility had approximately $10 million and $437 million of unrestricted cash on hand, respectively.

Speaker #2: In addition, the holding company has approximately $535 million in combined liquidity available under its ATM program and credit facility capacity. The utility also has approximately $518 million of liquidity available under its accounts receivable facility and credit facility capacity.

Speaker #2: Scott discussed rising fuel costs, and while we have a fuel cost pass-through mechanism, the higher costs started to impact our working capital following quarter end since we pay for fuel when delivered, based on the daily average prices of the previous month.

Paul Ito: Scott discussed rising fuel costs, and while we have a fuel cost pass-through mechanism, the higher costs started to impact our working capital following quarter end, since we pay for fuel when delivered based on the daily average prices of the previous month. For example, prices for fuel delivered and paid for in April are based on daily average prices in March. Those higher fuel costs are reflected in rates with a lag of approximately 1 to 2 months. With our strong liquidity, we believe we are well-positioned to handle the increase in working capital requirements due to the sharp rise in fuel prices. As mentioned, we made our first $479 million settlement payment on April 10. This payment was made using the funds previously set aside in a special-purpose vehicle. We expect to make future payments in April of 2027, 2028, and 2029.

Speaker #2: For example, prices for fuel delivered and paid for in April are based on daily average prices in March. Those higher fuel costs are reflected in rates with a lag of approximately 1 to 2 months.

Speaker #2: With our strong liquidity, we believe we are well positioned to handle the increase in working capital requirements due to the sharp rise in fuel prices.

Speaker #2: As mentioned, we made our first $479,000 settlement payment on April 10. This payment was made using the funds previously set aside in a special purpose vehicle.

Speaker #2: We expect to make future payments in April of 2027, 2028, and 2029. Our financing plans for these payments are unchanged from what we've communicated last quarter. We still expect to fund the second settlement payment with debt and/or convertible debt, and expect that payments thereafter will be funded with a mix of debt and equity, depending on market conditions.

Paul Ito: Our financing plans for these payments are unchanged from what we've communicated last quarter. We still expect to fund the second settlement payment with debt and/or convertible debt and expect that payments thereafter will be funded with a mix of debt and equity, depending on market conditions. We intend to manage our settlement financing consistent with targeting investment-grade credit metrics. We continue to see positive momentum from the rating agencies. Following the finalization of the global settlement and our first settlement payment, Moody's upgraded the utility to BA1 from BA2, one notch below investment grade, and the holding company to BA2 from BA3. Turning to the next slide, we've updated our CapEx forecast to reflect the WIOA approval. We are now expecting approximately $157 million of WIOA CapEx in 2026 versus previous expectations of approximately $90 million.

Speaker #2: We intend to manage our settlement financing consistent with targeting investment-grade credit metrics. We continue to see positive momentum from the rating agencies. Following the finalization of the global settlement and our first settlement payment, Moody's upgraded the utility to Ba1 from Ba2, one notch below investment grade, and the holding company to Ba2 from Ba3.

Speaker #2: Turning to the next slide, we've updated our CapEx forecast to reflect the WAIAO approval, and we are now expecting approximately $157 million of WAIAO CapEx in 2026 versus previous expectations of approximately $90 million.

Speaker #2: As Scott mentioned, we will request that about $247 million of WAIAO CapEx that is not being recovered separately through EPRM be recovered in the next rate case or rate rebasing. Expect higher O&M in 2026 as we progress through a year of transition ahead of our rate rebasing.

Paul Ito: As Scott mentioned, we will request that about 247 million of Waiau CapEx that is not being recovered separately through EPRM be recovered in the next rate case or rate rebasing proceeding. Lastly, as Scott mentioned, we do expect higher O&M in 2026 as we progress through a year of transition ahead of our rate rebasing. This is due to the following factors: higher insurance premiums, primarily reflecting our deferral treatment of wildfire insurance premiums prior to 2026, storm response expenses related to severe weather in February and March, higher vegetation management expenses as we prioritize safety following record rainfall in the Q1, higher overhauls and station maintenance expenses as we prioritize reliability, higher IT-related costs as we improve our cyber defenses, and higher labor and benefit costs. We expect these expenses to drive an O&M increase that significantly outpaces inflation this year.

Speaker #2: This is due to the following factors: higher insurance premiums, primarily reflecting our deferral treatment of wildfire insurance premiums prior to 2026; storm response expenses related to severe weather in February and March; higher vegetation management expenses as we prioritize safety following record rainfall in the first quarter; higher overhauls in station maintenance expenses as we prioritize reliability; higher IT-related costs as we improve our cyber defenses; and higher labor and benefit costs.

Speaker #2: We expect these expenses to drive an O&M increase that significantly outpaces inflation this year. In addition, we also expect to realize the maximum penalty under our Fuel Cost Risk-Sharing mechanism, or FCRS. This mechanism provides for earnings upside and downside based on procured fuel costs compared to benchmarks.

Paul Ito: In addition, we also expect to realize the maximum penalty under our fuel costs risk-sharing mechanism, or FCRS. This mechanism provides for earnings upside and downside based on procured fuel costs compared to benchmarks. You can see exactly what those benchmarks are in the appendix of this presentation, but as you might expect, due to the global energy situation that's unfolded since late February, we are now considerably above those levels. As a reminder, the FCRS runs through our revenue, so penalties are recorded as a revenue reduction. Our rate rebasing request is intended to address many of these higher costs, such as the increased insurance premiums we experienced over the last few years. Additionally, we are in the process of reprioritizing work to mitigate the expected impact of the increases. With that, let's open up the call to questions.

Speaker #2: You can see exactly what those benchmarks are in the appendix of this presentation, but as you might expect, due to the global energy situation that's unfolded since late February, we are now considerably above those levels.

Speaker #2: As a reminder, the FCRS runs through our revenues, so penalties are recorded as a revenue reduction. Our rate rebasing request is intended to address many of these higher costs, such as the increased insurance premiums we experienced over the last few years.

Speaker #2: Additionally, we are in the process of reprioritizing work to mitigate the expected impact of the increases. With that, let's open up the call to questions.

Speaker #1: Thank you. If you would like to ask a question, please press *1 on your telephone keypad to raise your hand and join the queue.

Operator: Thank you. If you would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you'd like to withdraw that question, again, press star one. Your first question comes from James Ward with Jefferies. Please go ahead.

Speaker #1: And if you'd like to withdraw that question, again, press star one. Your first question comes from James Ward with Jefferies. Please go ahead.

Speaker #3: Hi, guys. Thanks for taking the questions. Appreciate it. So, first one—the rebasing proposal you showed today shows $145,027, and then an incremental $25,028 for $170.

James Ward: Hi, guys. Thanks for taking the questions. Appreciate it. First one, the rebasing proposal you show today shows $145 million in 2027 and then incremental $25 million in 2028 for $170 million. Our understanding from the 6 March filing was still $170 million, but it was $125 million and then $45 million. Can you clarify whether the phasing has been revised? Separately, is there any update on when the PUC might provide a procedural schedule?

Speaker #3: Our understanding from the March 6th filing was still 170, but it was 125 and then 45. Can you clarify whether the phasing has been revised, and separately, is there any update on when the PUC might provide a procedural schedule?

Speaker #4: Yeah, thanks, James. This is Scott Seu. Let me ask Joel Viola—he's our Senior Vice President who oversees our regulatory process area—to respond to your question.

Scott Seu: Yeah. Thanks, James. This is Scott Seu. Let me ask Joe Viola, he's our Senior Vice President who oversees our regulatory process area, to respond to your question.

Speaker #5: Hi, James. To your first question, no, there hasn't been any change to the way we're going to phase in the proposed revenue increase. And second, we're waiting for further guidance from the Commission.

Joe Viola: Hi, James. To your first question, no, there hasn't been any change to the way we're gonna phase in the proposed revenue increase. Second, we're waiting for further guidance from the commission. When we filed the proposal, since this was a novel process, we suggested a procedural process to review this that would allow for public input. Also, we expected we need to get a certification from the commission that we complied with the order that allowed this proposal. We're confident we did, but we're just waiting on that order and further guidance on what the process will be to review it.

Speaker #5: When we filed the proposal, since this was a novel process, we suggested a procedural process to review this that would allow for public input.

Speaker #5: And also, we expected we need to get a certification from the commission that we complied with the order that allowed this proposal. So we're confident we did, but we're just waiting on that order and further guidance on what the process will be to review it.

Speaker #3: Gotcha. Gotcha. Appreciate that. So, on the repowering and the $247 million gap that Paul spoke to and that is in the slides there, that you're going to see in the next rate proceeding, which you estimated is around 2031, how should we think about the carrying cost of that?

James Ward: Gotcha. Appreciate that. On the repowering, and the $247 million gap that Paul spoke to and that is in the slides there, that you're gonna see in the next rate proceeding, which you estimated is around 2031, how should we think about the carrying cost of that? I'm just gonna I'll call it $250 million, just a quarter billion, between in service and rate recovery. I guess more importantly and pertinent to the current proceeding, how does the existence of the gap have or not have any impact on the current rebasing proposal?

Speaker #3: I'm just going to—I'll call it $250 million, just the quarter billion. Between in-service and rate recovery, and I guess, more importantly and pertinent to that current proceeding, how does the existence of the gap have or not have any impact on the current rebasing proposal?

Speaker #5: So James, let me answer the first question. So the question was, how are our carrying costs accounted for?

Paul Ito: James, let me answer the first question. The question was how are carrying costs accounted for.

James Ward: yes, please. Thank you

Speaker #3: Oh, yes, please. Thank you.

James Ward: yes, please. Thank you

Speaker #5: Associated with the project. So we would accrue AFUDC at our current approved weighted average cost of capital, which on Oahu, I believe, is about 7.37% on a combined basis.

Paul Ito: associated with the project. We would accrue AFUDC at our current approved weighted average cost of capital, which on Oahu, I believe, is about, you know, 7.37% on a combined basis. We would accrue AFUDC at that rate.

Speaker #5: So we would accrue AFUDC at that rate.

Speaker #3: Perfect. Okay. Gotcha. And so, is there any interaction with the current rebasing proposal, or is this all something that would be allocated towards 2031?

James Ward: Perfect. Okay.

Paul Ito: I'm sorry.

James Ward: Gotcha. Is there any interaction with the current rebasing proposal, or is this all something that would be allocated towards 2031?

Speaker #5: Hi, James. This is Joel Viola again. No, there's no interaction. That project was not part of our rebasing proposal because it's not in service yet, right?

Joe Viola: Hi, James. This is Joe Viola again. No, there's no interaction. That project was not part of our rebasing proposal because it's not in service yet, right? We got approval to recover about 80% of that through a special recovery mechanism. Then in the next rebasing process around, we would expect around 2031, we would seek the final cost there.

Speaker #5: So, we got approved to recover about 80% of that through a special recovery mechanism. And then, in the next rebasing process, which we would expect around 2031, we would seek the final cost there.

Speaker #3: Gotcha. Okay. Has the PUC opened or indicated any kind of timeline for opening a formal rulemaking docket on the wildfire liability cap under Act 258?

James Ward: Gotcha. Okay. Has the PUC opened or indicated any kind of timeline for opening a formal rulemaking docket on the wildfire liability cap under Act 258? Not talking about new legislation, I guess the legislative sessions, you know, we're through that, but the one that was already, one addressed in Act 258, the cap that was intended to.

Speaker #3: So, not talking about new legislation, I guess, but legislative sessions—we're through that. But the one that was already, the one addressed in Act 258, the cap that was mandatory.

Speaker #4: Yeah, James. This is Scott again. The PUC has not issued anything formal. We understand, as alluded to in the report that they filed at the end of last year, that they would be initiating their work on the rulemaking process.

Scott Seu: Yeah, James, this is Scott again. The PUC has not issued anything formal. We understand, as they alluded to in the report that they filed at the end of last year, that they would be initiating their work on the rulemaking process. Other than throwing out a 18 to 24 month expected timeframe to complete that rulemaking process, they've not said anything further publicly.

Speaker #4: And other than throwing out an 18- to 24-month expected timeframe to complete that rulemaking process, they've not said anything further publicly.

Speaker #3: Okay. Fair enough. We hadn't seen anything either, but just wanted to check. Thanks. Last one I'll ask. It was just S&P and Fitch, as you guys mentioned, now have positive outlooks on both HEI and Hawaiian Electric.

James Ward: Okay. Fair enough. We hadn't seen anything either, but just wanted to check. Thanks. Last one I'll ask is just S&P and Fitch, as you guys mentioned, now have positive outlooks on both HEI and Hawaiian Electric. With the settlement now resolved, and congrats again on that, what are the rating agencies communicating as the remaining gating items for an upgrade, and is the liability cap explicitly part of that conversation?

Speaker #3: So with the settlement now resolving—congrats again on that—what are the rating agencies communicating as the remaining gating items for an upgrade? And is the liability cap explicitly part of that conversation?

Speaker #3: And.

Speaker #5: Yeah. So in our discussions with the rating agencies—and of course, what they tell us is, they don't tell us exactly, 'Here’s what you need to do to get upgraded.'

Paul Ito: Yeah. In our discussions with the rating agencies, and of course, you know, what they tell us is they don't tell us exactly, you know, Here's what you need to do to get upgraded. What our discussions have included and what the reports show, what they're focused on is, of course, the outcome of the rate rebasing, progress on reducing wildfire risk across our system, but also the liability cap and the wildfire recovery fund. All of those are taken as inputs into their rating methodology. As I mentioned, they're focused on it. We just don't know, and they don't disclose exactly, you know, which elements have to be present for an upgrade.

Speaker #5: But what our discussions have included, and what the reports show, what they're focused on is, of course, the outcome of the rate rebasing progress on reducing wildfire risk across our system, but also the liability cap and the Wildfire Recovery Fund.

Speaker #5: So all of those are taken as inputs into their rating methodology. As I mentioned, they're focused on it. We just don't know, and they don't disclose exactly which elements have to be present for an upgrade.

Speaker #5: But as you mentioned, we were very pleased to see that Moody's upgraded us—both the holding company and the utility—one notch based on the settlement being final.

Paul Ito: As you mentioned, we were very pleased to see that Moody's upgraded us, both the holding company and the utility one notch, based on the settlement being final. Now they're turning their attention, obviously, to the other things that I mentioned, the rate rebasing and the liability cap.

Speaker #5: And now they're turning their attention, obviously, to the other things that I mentioned—the rate rebasing and the liability cap.

Speaker #3: Gotcha. Thank you for that. I'll hop back in the queue and give anyone else who's on the call list an opportunity to ask.

James Ward: Gotcha. Thank you for that. I'll hop back in the queue and give anyone else who's on the call an opportunity to ask.

Speaker #4: All right. Thanks, James.

Scott Seu: All right. Thanks, James.

Speaker #1: Your next question comes from the line of Michael Logan with Barclays. Please go ahead.

Operator: Your next question comes from the line of Michael Logan with Barclays. Please go ahead.

Speaker #6: Hi, thanks for taking my questions. I was just wondering if you could talk more about the drivers of the increased tier capital program. The separate recovery bucket was increased in your slide.

Michael Logan: Hi. Thanks for taking my questions. I was just wondering if you could talk more about the drivers of the increase to your capital program. The separate recovery bucket was increased in your slide. I know some is associated with the repowering. Just wondering if you could talk about other drivers and how much of it is EPRM recovery and therefore likely to earn higher ROEs.

Speaker #6: I know some is associated with the repowering. Just wondering if you could talk about other drivers, and how much of it is EPRM recovery and therefore likely to earn higher ROEs.

Speaker #5: Hey, Michael. This is Paul. Yeah, so in our CapEx forecast, we are forecasting generally what we describe as our baseline CapEx. So these are our more business-as-usual type of projects, roughly $350 to $400 million a year.

Paul Ito: Hey, Michael, this is Paul. In our CapEx forecasts, we are forecasting generally what we describe as our baseline CapEx. These are, you know, more business as usual type of projects, roughly $350 to 400 million a year. The increase in CapEx is, as you mentioned, largely due to separately recovered projects like Waiau and Waianae BESS are 2 examples. Those are the bigger drivers. We have 2 buckets in that category: approved and applications waiting to be approved. In the approved bucket, the change for this quarter was that Waiau is now approved. As an example for, I'll just use 2027, there's about $250 million of capital in that particular bucket for the approved.

Speaker #5: And the increase in CapEx is, as you mentioned, largely due to separately recovered projects like Wai'au and Waiana BESS—those are two examples. So those are the bigger drivers.

Speaker #5: We have two buckets in that category: approved, and applications waiting to be approved. So, in the approved bucket, the change for this quarter was that Wai'au is now approved.

Speaker #5: And so, as an example—for I'll just use 2027—there's about $250 million of capital in that particular bucket for the approved. But we still have capital that is not approved and pending approval.

Paul Ito: We still have capital that is not approved and pending approval, and that totals about $135 million in 2027. You can find the details in our appendix in our earnings deck. Hopefully, that gives you the color of the baseline CapEx and then the capital that we're putting to work where we get separate recovery or special recovery in between rate cases.

Speaker #5: And that totals about $135 million in 2027. So you can find the details in our appendix in our earnings deck. But hopefully that gives you the color of the baseline CapEx, and then the capital that we're putting to work where we get separate recovery or special recovery in between rate cases.

Speaker #6: Thank you. And then, now that the settlement has been approved and you made your first payment, what are your current thoughts on the timing of raising the funds for the second payment?

Michael Logan: Thank you. You know now that the settlement has been approved and you made your first payment, what are your current thoughts on the timing of raising the funds for the second payment? I know as of the last earnings call, you said you were leaning towards a convertible bond, but probably wouldn't issue it, you know, very far in advance of the second payment date.

Speaker #6: I know as of the last earnings call, you said you were leaning towards a convertible bond, but probably wouldn't issue it very far in advance of the second payment date.

Speaker #5: Yeah, so we have basically about a year to determine when and how to raise the next settlement payment. So it gives us a lot of flexibility on timing.

Paul Ito: Yeah. We have basically about a year to determine when and how to raise the next settlement payment, so it gives us a lot of flexibility on timing. Our decision will really be based on market conditions and, you know, you know, we're gonna be opportunistic in raising this second payment. As mentioned, you know, convertible debt is an option. It does appear to be one of the cheaper sources of capital, at least at the moment. But that could change. We're gonna, you know, monitor conditions and when we feel like it's a good time to, you know, to access the market, we'll do so.

Speaker #5: Our decision will really be based on market conditions, and we're going to be opportunistic in raising the second payment. As mentioned, convertible debt is an option.

Speaker #5: It does appear to be one of the cheaper sources of capital, at least at the moment. But that could change. So we're going to monitor conditions, and when we feel like it's a good time to access the market, we'll do so.

Speaker #6: Thank you. And then also wondering if you could talk more about how you're feeling with the higher oil prices, fuel costs, and your liquidity position.

Michael Logan: Thank you. You know, also wondering if you could talk more about, you know, how you're feeling with the higher oil prices, you know, fuel costs, and your liquidity position. Sounds like you feel like you're in a good spot. Do you expect to, you know, to be there with just the cash on your balance sheet and existing credit facilities, or do you think you'll rely heavily on commercial paper as well? Just wondering, you know, how you expect to bridge the gap, the timing mismatch between fuel payments and customer recovery.

Speaker #6: Sounds like you feel like you're in a good spot. Do you expect to be there with just the cash on your balance sheet and existing credit facilities, or do you think you'll rely heavily on commercial paper as well?

Speaker #6: Just wondering how you expect to bridge the gap—the timing mismatch—between fuel payments and customer recovery.

Speaker #5: Yeah. So at the end of the quarter, we had almost $1 billion of liquidity, split between cash on our balance sheet, our senior credit facility of $300 million, and our AR/ABL facility.

Paul Ito: At the end of the quarter, we had almost $1 billion of liquidity split between cash on our balance sheet, our senior credit facility of $300 million, and our AR ABL facility that is about $250 million, but based on AR at the time, about $218 million. We have significant liquidity available. We do as we mentioned, we do have a full fuel cost pass-through, but there is a lag, and so it could affect our working capital. Typically, the lag is a few months. We have a little bit over a month of fuel inventory. Then, of course, we bill customers and, you know, the daily sales outstanding is roughly 20 to 25 days. It's again, a couple of months.

Speaker #5: That is about $250 million. But based on AR at the time, about $218 million. So we have significant liquidity available. We do, as we mentioned, have a full fuel cost pass-through, but there is a lag.

Speaker #5: And so, it could affect our working capital. Typically, the lag is a few months. We have a little bit over a month of fuel inventory.

Speaker #5: And then, of course, we bill customers, and the daily sales outstanding is roughly 20 to 25 days. So it's, again, a couple of months.

Speaker #5: So, I guess the question in how much of an impact to liquidity we'll see is really how long this elevated fuel price situation stays in place.

Paul Ito: The question in how much of an impact to liquidity we'll see is really how long this elevated fuel price situation, you know, stays in place. Again, regardless of whether it's short-term or long-term, we do feel very confident that we have sufficient liquidity to weather it.

Speaker #5: But again, regardless of whether it's short term or long term, we do feel very confident that we have sufficient liquidity to weather it.

Michael Logan: Thank you. You know, given the high oil prices, do you have an expectation for what you think bad debt expense could be if they remain elevated for the rest of the year? Or maybe like, you know, an amount per month?

Speaker #6: Thank you. And then, given the high oil prices, do you have an expectation for what you think bad debt expense could be if they remain elevated for the rest of the year, or maybe an amount per month?

Speaker #5: Yeah. And maybe the way I'll describe the potential impact—and this goes to the view of whether it's a long-term or short-term impact—on elevated fuel prices.

Paul Ito: Yeah. Maybe the way I'll describe the potential impact, and this goes to, you know, the view of whether it's a long-term or short-term impact in elevated fuel prices. I'll use, you know, back when COVID occurred, and then shortly thereafter, there was the Ukraine-Russia war. In that situation, our bad debt write-off percentage peaked at about 51 basis points. Typically, we're, you know, in the 10 to 20 basis point range. Obviously, you know, a significant increase of our baseline, but generally speaking, you know, really good, or limited impact in terms of, you know, bad debt compared to, you know, what we've seen in other places. Part of that is, of course, you know, we're not connected, right, to other areas.

Speaker #5: I'll use back when COVID occurred, and then shortly thereafter there was the Ukraine-Russia war. In that situation, our bad debt write-off percentage peaked at about 51 basis points.

Speaker #5: Typically, we're in the 10- to 20-basis-point range. So, obviously, a significant increase of our baseline. But generally speaking, really good or limited impact in terms of bad debt compared to what we've seen in other places.

Speaker #5: Part of that is, of course, we have—we're not connected, right, to other areas. And so, if you're living in Hawaii, you have to connect to the utility.

Paul Ito: If you're living in Hawaii, you have to connect to the utility. Again, you know, we're ready for that. Again, it comes down to whether it's a near or long-term in terms of, you know, how much that write-off percentage would increase.

Speaker #5: So, again, we're ready for that. But again, it comes down to whether it's a near- or long-term, in terms of how much that write-off percentage would increase.

Speaker #6: Thank you. And then just wondering if you could share, amid these elevated oil prices, your thoughts on your confidence around the rebasing proposal and high customer bills.

Michael Logan: Thank you. Just wonder if you could share, you know, amid these elevated oil prices, your thoughts on your confidence around the rebasing proposal, you know, and high customer bills. I know it's somewhat of a modest rebasing request, but, you know, just share your confidence about, you know, it getting approved right now and also what your expectations are of when you'll get a decision on it.

Speaker #6: I know it's somewhat of a modest rebasing request, but just share your confidence about it getting approved right now, and also what your expectations are for when you'll get a decision on it.

Speaker #4: Yeah. Mike, this is Scott. So I think it's fair to say that our Public Utilities Commission is very focused on impacts to customers because of the high oil prices, and as they look at our rate rebasing requests, we understand that in that context it puts pressure on them.

Scott Seu: Yeah. Mike, this is Scott. You know, I think it's fair to say that our Public Utilities Commission is very focused on impacts to customers because of the high oil prices. As they look at our rate rebasing request, we understand that that context, you know, it puts pressure on them, it puts pressure on us. At the same time, as you mentioned, you know, we really worked hard, including with Ulupono Initiative, to come up with a rate rebasing proposal that is pretty solid, and at the same time, really tries to moderate the impacts on our customers and spread out some of those impacts. You know, again, can't predict exactly ultimately what the PUC will decide here, but hopefully, they understand that we also are putting customer affordability at the forefront.

Speaker #4: It puts pressure on us. At the same time, as you mentioned, we really worked hard, including with Ulupono Initiative, to come up with a rate rebasing proposal that is pretty solid.

Speaker #4: And at the same time, really tries to moderate the impacts on our customers and spread out some of those impacts. So again, can't predict exactly, ultimately, what the PUC will decide here, but hopefully they understand that we also are putting customer affordability at the forefront.

Speaker #6: Thank you. And then, lastly from me, I was just wondering if you could talk about the PIMS and the rebasing proposal, the achievability of them.

Michael Logan: Thank you. Lastly from me, I was just wondering if you could talk about the PIMs in the rebasing proposal, the achievability of them. I know the prior framework didn't seem, you know, so conducive to achievement, the reward.

Speaker #6: I know the prior framework didn't seem so conducive to achievement—the rewards.

Speaker #4: Hi, Michael. This is Joe Viola again. That's actually an ongoing discussion with the stakeholders in that process and with the commission. So, as you know, we've all lived and learned.

Joe Viola: Hi, Michael, this is Joe Viola again. You know, that's actually an ongoing discussion with the stakeholders in that process and with the commission. As you know, we've all lived and learned, so I think we're in a good position to identify design-wise, what works and what doesn't work. That's actually, you know, the section of the process we're in right now. We're proposing or we're going to be proposing changes to the PIMs to make sure that they are reasonably within our control to achieve, and the targets are clear and based on, you know, good baselines, things like that. Again, really just lessons learned from the first time around, take those into consideration. Propose PIMs that we think will be meaningful.

Speaker #4: So, I think we're in a good position to identify, design-wise, what works and what doesn't work. So that's actually the section of the process we're in right now.

Speaker #4: We're proposing, or we're going to be proposing, changes to the PIMs to make sure that they are reasonably within our control to achieve, and the targets are clear and based on good baselines, things like that.

Speaker #4: So again, really just lessons learned from the first time around—take those into consideration, propose PIMs that we think will be meaningful.

Speaker #6: Great. Thanks for taking my question.

Michael Logan: Great. Thanks for taking my question.

Speaker #1: Your next question comes from the line of James Ward with Jefferies. Please go ahead.

Operator: Your next question comes from the line of James Ward with Jefferies. Please go ahead.

Speaker #4: Hi, guys. Thanks. So just a quick follow-up on the way I'm repowering. So the AFUDC would only be through COD in, I believe, it's late 2029.

James Ward: Hi, guys. Thanks. Just a quick follow-up on the Waiau repowering. The AFUDC would only be through COD in, I believe it's late 2029. Is that right? After that, you have depreciation drag and so on. I guess, in summary, how should we kind of think about the incremental lag towards the end here or just the incremental lag until it's factored in that 2031 filing? Thanks.

Speaker #4: Is that right? And then after that, you'd have depreciation drag and so on. So I guess, in summary, how should we kind of think about the incremental leg towards the end here, or just the incremental leg until it's factored in in that 2031 filing?

Speaker #4: Thanks.

Speaker #5: Yeah. So you should think of the WIOW as essentially sort of three projects in a larger project. So there are six turbines, two turbines to be put into service in different years.

Paul Ito: Yeah. You should think of the Waiau as essentially sort of 3 projects in a larger project. There are 6 turbines, 2 turbines to be put into service in different years. The 1st pair is in 2029, 2nd pair is in 2031, 3rd pair is in 2033. It's important to remember that we are approved for a baseline of recovery, right, of $909 million across those 6 turbines. What remains to be determined is when that 1st pair goes into service, we would have to file for recovery at that point in time. You know, to be determined, which is what we're going to be asking for at that point in time.

Speaker #5: So the first pair is in 2029. The second pair is in 2031. The third pair is in 2033. And it's important to remember that we are approved for a baseline recovery of $909 million across those six turbines.

Speaker #5: What remains to be determined is when that first pair goes into service. We would have to file for recovery at that point in time.

Speaker #5: And the to-be-determined, which is what we're going to be asking for at that point in time. But I want to make clear that because it's going into service in different years, we would start getting recovery in those separate years once those turbines are put into service.

Paul Ito: wanna make clear that because it's going into service in different years, we would start getting recovery in those separate years once those turbines are put into service.

Speaker #4: Okay. Gotcha. Thank you. Thank you very much.

James Ward: Okay. Gotcha. Thank you. Thank you very much.

Speaker #1: And that concludes our question and answer session. I would now like to turn the conference back over to Scott Seu, CEO, for closing comments.

Operator: That concludes our question and answer session. I would now like to turn the conference back over to Scott Seu, CEO, for closing comments.

Speaker #4: Thank you all for calling in today. In closing, we've reached a pivotal milestone now that we've resolved the Maui wildfire tort litigation. 2026 will continue to be a year of transition for us, but with our streamlined business model, solely focused on our regulated utility operations, we believe we have a strong foundation to continue providing our communities with safe, reliable, and resilient service for the long term.

Scott Seu: Thank you all for calling in today. In closing, we've reached a pivotal milestone now that we've resolved the Maui wildfire tort litigation. 2026 will continue to be a year of transition for us. With our streamlined business model solely focused on our regulated utility operations, we believe we've a strong foundation to continue providing our communities with safe, reliable, and resilient service for the long term. Again, thanks everybody for joining us, and thank you for your support as we go forward.

Speaker #4: So again, thanks, everybody, for joining us. And thank you for your support as we go forward.

Operator: Ladies and gentlemen, this does conclude today's conference call. Thank you for your participation, and you may now disconnect.