Segment financial information

12 Months Ended

Dec. 31, 2014

Segment Reporting [Abstract]

Segment financial information

3 · Segment financial information

The electric utility and bank segments are strategic business units of the Company that offer different products and services and operate in different regulatory environments. The accounting policies of the segments are the same as those described for the Company in the summary of significant accounting policies, except as otherwise indicated and except that federal and state income taxes for each segment are calculated on a “stand-alone” basis. HEI evaluates segment performance based on net income. Each segment accounts for intersegment sales and transfers as if the sales and transfers were to third parties, that is, at current market prices. Intersegment revenues consist primarily of interest, rent and preferred stock dividends.

Electric utility

Hawaiian Electric and its wholly-owned operating subsidiaries, Hawaii Electric Light and Maui Electric, are public electric utilities in the business of generating, purchasing, transmitting, distributing and selling electric energy on all major islands in Hawaii other than Kauai, and are regulated by the PUC. The Utilities have been aggregated into the electric utility segment primarily because all three entities: (1) are involved in the business of supplying electric energy in the same geographical location (i.e., the State of Hawaii), (2) have similar production processes that include electric generators (e.g., conventional oil-fired steam units and combustion turbines), (3) serve similar customers within their franchise territories (e.g., residential, commercial and industrial customers), (4) use similar electric grids to distribute the energy to their customers, (5) are regulated by the PUC and undergo similar rate-making processes, (6) have similar economic characteristics, and (7) perform financial reporting oversight and management of the business at the consolidated level. Hawaiian Electric also owns the following nonregulated subsidiaries: Renewable Hawaii, Inc. (RHI), which was formed to invest in renewable energy projects; HECO Capital Trust III, which is a financing entity; and Uluwehiokama Biofuels Corp. (UBC), which was formed to own a new biodiesel refining plant to be built on the island of Maui, which project has been terminated.

Bank

ASB is a federally chartered savings bank providing a full range of banking services to individual and business customers through its branch system in Hawaii. ASB is subject to examination and comprehensive regulation by the Office of the Comptroller of the Currency (OCC) (previously by the Department of Treasury, Office of Thrift Supervision (OTS)) and the Federal Deposit Insurance Corporation (FDIC), and is subject to reserve requirements established by the Board of Governors of the Federal Reserve System.

Other

“Other” includes amounts for the holding companies (HEI and ASB Hawaii, Inc.), other subsidiaries not qualifying as reportable segments and intercompany eliminations.

Segment financial information was as follows:

(in thousands)	Electric utility		Bank		Other			Total
2014
Revenues from external customers	$	2,987,299	$	252,497	$	(254	)	$	3,239,542
Intersegment revenues (eliminations)	24		—		(24		)	—
Revenues	2,987,323		252,497		(278		)	3,239,542
Depreciation and amortization	174,478		5,399		1,361			181,238
Interest expense, net	64,757		10,808		11,595			87,160
Income (loss) before income taxes	220,361		75,619		(34,058		)	261,922
Income taxes (benefit)	80,725		24,127		(13,140		)	91,712
Net income (loss)	139,636		51,492		(20,918		)	170,210
Preferred stock dividends of subsidiaries	1,995		—		(105		)	1,890
Net income (loss) for common stock	137,641		51,492		(20,813		)	168,320
Capital expenditures	311,574		28,073		74			339,721
Assets (at December 31, 2014)	5,590,457		5,565,241		28,463			11,184,161
2013
Revenues from external customers	$	2,980,139	$	258,147	$	184		$	3,238,470
Intersegment revenues (eliminations)	33		—		(33		)	—
Revenues	2,980,172		258,147		151			3,238,470
Depreciation and amortization	159,102		4,230		1,396			164,728
Interest expense, net	59,279		10,077		16,200			85,556
Income (loss) before income taxes	194,041		87,059		(33,353		)	247,747
Income taxes (benefit)	69,117		29,525		(14,301		)	84,341
Net income (loss)	124,924		57,534		(19,052		)	163,406
Preferred stock dividends of subsidiaries	1,995		—		(105		)	1,890
Net income (loss) for common stock	122,929		57,534		(18,947		)	161,516
Capital expenditures	342,485		11,193		201			353,879
Assets (at December 31, 2013)	5,087,129		5,243,824		9,091			10,340,044
2012
Revenues from external customers	$	3,109,353	$	265,539	$	103		$	3,374,995
Intersegment revenues (eliminations)	86		—		(86		)	—
Revenues	3,109,439		265,539		17			3,374,995
Depreciation and amortization	151,496		5,334		1,517			158,347
Interest expense, net	62,055		11,292		16,096			89,443
Income (loss) before income taxes	162,319		89,021		(33,933		)	217,407
Income taxes (benefit)	61,048		30,384		(14,573		)	76,859
Net income (loss)	101,271		58,637		(19,360		)	140,548
Preferred stock dividends of subsidiaries	1,995		—		(105		)	1,890
Net income (loss) for common stock	99,276		58,637		(19,255		)	138,658
Capital expenditures	310,091		14,979		410			325,480
Assets (at December 31, 2012)	5,108,793		5,041,673		(1,334		)	10,149,132

Intercompany electricity sales of the Utilities to the bank and “other” segments are not eliminated because those segments would need to purchase electricity from another source if it were not provided by the Utilities, the profit on such sales is nominal and the elimination of electric sales revenues and expenses could distort segment operating income and net income for common stock.

Bank fees that ASB charges the Utilities and “other” segments are not eliminated because those segments would pay fees to another financial institution if they were to bank with another institution, the profit on such fees is nominal and the elimination of bank fee income and expenses could distort segment operating income and net income for common stock.