Daily Brief Utilities: Hawaiian Electric Inds, Idacorp Inc and more

• Existential Threat from Wildfire Litigation: The company faces monumental challenges following the August 2023 Maui wildfires. A global settlement has been reached in principle, with HEI’s portion being approximately $1.99 billion to resolve tort claims. While this provides a path forward, the financial overhang is severe and will require significant financing, pressuring the balance sheet for years.
• Operational and Financial Restructuring: In response to the crisis, HEI has suspended its dividend, sold non-core assets, and is intensely focused on wildfire mitigation and grid hardening, with a planned investment of $400 million from 2025-2027. Credit rating agencies have downgraded the company to below investment grade, reflecting the heightened risk profile, although recent positive legal developments have led to some upgrades and a more stable outlook.
• Regulated Monopoly with a Cloudy Future: As the provider of electricity to 95% of Hawaii’s population, HEI operates as an essential monopoly. However, its future is contingent on navigating the settlement financing, maintaining regulatory support from the Hawaii Public Utilities Commission for cost recovery and investments, and successfully executing its wildfire safety strategy to prevent future catastrophes.

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• IDACORP, Inc.’s latest earnings call presented a mixed bag of developments as it navigates growth and energy transition challenges.
• The company reported a positive quarter, with a noticeable increase in its EPS, rising to $2.26 from last year’s $2.12 for the same period, supported by higher retail revenues resulting from a rate change and customer growth, despite experiencing lower usage per customer.
• The year’s first three quarters delivered a cumulative EPS of $5.13 compared to $4.82 in the previous year, driven by a significant increase in additional tax credit amortization.