Segment financial information

12 Months Ended

Dec. 31, 2022

Segment Reporting [Abstract]

Segment financial information

Note 2 · 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 (i.e., at current market prices). Intersegment revenues consist primarily of Hamakua Energy electricity revenues, 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 utility subsidiaries are aggregated within the electric utility segment because they: (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 comprise electric generation, (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.

Bank

ASB is a federally chartered savings bank that provides 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) 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), Pacific Current and its subsidiaries, and other inactive subsidiaries not qualifying as reportable segments, and intercompany eliminations.

Pacific Current. Pacific Current was formed in 2017 to focus on investing in non-regulated renewable energy and sustainable infrastructure in the State of Hawaii to help achieve the state’s sustainability goals. Significant investments of Pacific Current made through its subsidiaries, Hamakua Energy, Mauo, Kaʻieʻie Waho, and Mahipapa include:

Hamakua power plant. In 2017, Hamakua Energy acquired Hamakua Energy Partners, L.P.’s 60-MW combined cycle power plant and other assets from affiliates of ArcLight Capital Partners, a private equity firm. The plant sells all the power it produces to Hawaii Electric Light under an existing power purchase agreement (PPA) that expires in 2030.

Solar-plus-storage power purchase agreement. In 2018, Mauo executed definitive agreements to acquire a solar-plus-storage PPA for a multi-site, commercial-scale project that provides 8.1 MW of solar capacity and 42.6 megawatt-hours (MWh) of storage capacity on the islands of Maui and Oahu. The PPA has a 15-year term with a customer option to extend for an additional five years.

6-MW photovoltaic system. In September 2020, Kaʻieʻie Waho acquired a 6-MW photovoltaic system situated on 20 acres of land on the island of Kauai. Kauai Island Utility Cooperative purchases all of the power generated by the system under a PPA that expires in 2033.

7.5-MW renewable, firm dispatchable closed-loop biomass-to-energy facility. In July 2022, Mahipapa acquired a 7.5-MW renewable, firm dispatchable closed-loop biomass-to-energy facility on Kauai. Kauai Island Utility Cooperative purchases all of the power generated by the system under a PPA that expires in 2035.

Segment financial information was as follows:

(in thousands)	Electric utility		Bank		Other		Total
2022
Revenues from external customers	$	3,408,583	$	321,068	$	12,334	$	3,741,985
Intersegment revenues (eliminations)	4		—		(4)		—
Revenues	3,408,587		321,068		12,330		3,741,985
Depreciation and amortization	260,744		24,436		9,661		294,841
Interest expense, net	76,416		13,301		26,986		116,703
Income (loss) before income taxes	240,600		102,241		(38,646)		304,195
Income taxes (benefit)	49,676		22,252		(10,761)		61,167
Net income (loss)	190,924		79,989		(27,885)		243,028
Preferred stock dividends of subsidiaries	1,995		—		(105)		1,890
Net income (loss) for common stock	188,929		79,989		(27,780)		241,138
Capital expenditures1	329,457		4,704		9,876		344,037
Assets (at December 31, 2022)	6,597,467		9,545,970		140,807		16,284,244
2021
Revenues from external customers	$	2,539,589	$	306,398	$	4,392	$	2,850,379
Intersegment revenues (eliminations)	47		—		(47)		—
Revenues	2,539,636		306,398		4,345		2,850,379
Depreciation and amortization	251,206		21,124		6,372		278,702
Interest expense, net	72,447		5,040		21,916		99,403
Income (loss) before income taxes	223,785		130,559		(43,481)		310,863
Income taxes (benefit)	44,148		29,325		(10,666)		62,807
Net income (loss)	179,637		101,234		(32,815)		248,056
Preferred stock dividends of subsidiaries	1,995		—		(105)		1,890
Net income (loss) for common stock	177,642		101,234		(32,710)		246,166
Capital expenditures1	292,000		11,131		11,393		314,524
Assets (at December 31, 2021)	6,491,625		9,181,603		149,409		15,822,637
2020
Revenues from external customers	$	2,265,281	$	313,511	$	983	$	2,579,775
Intersegment revenues (eliminations)	39		—		(39)		—
Revenues	2,265,320		313,511		944		2,579,775
Depreciation and amortization	256,479		29,349		4,950		290,778
Interest expense, net	67,794		11,114		20,900		99,808
Income (loss) before income taxes	211,753		69,271		(40,400)		240,624
Income taxes (benefit)	40,418		11,688		(11,196)		40,910
Net income (loss)	171,335		57,583		(29,204)		199,714
Preferred stock dividends of subsidiaries	1,995		—		(105)		1,890
Net income (loss) for common stock	169,340		57,583		(29,099)		197,824
Capital expenditures1	350,864		12,203		20,828		383,895
Assets (at December 31, 2020)	6,457,373		8,396,533		150,101		15,004,007

1    Contributions in aid of construction balances are included in capital expenditures.

Intercompany electricity sales of the Utilities to ASB 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 and the profit on such sales is nominal.

Hamakua Energy’s sales to Hawaii Electric Light (a regulated affiliate) are eliminated in consolidation.