Hawaiian Electric Holds Steady Amid Regulatory Winds: A Look at Q1 2025 Results

Hawaiian Electric Industries (HEI) reported its first-quarter 2025 results, balancing resilience against the backdrop of wildfire liabilities, regulatory shifts, and ambitious clean energy goals. While GAAP earnings dipped to $0.15 per share—hampered by one-time costs—the company’s Non-GAAP EPS of $0.23 met consensus estimates, signaling stability. Revenue rose to $744.07 million, driven by regulated utility growth and strategic cost efficiencies. But the real story lies in how HEI is navigating its way through a complex web of risks and opportunities.

The GAAP-Non-GAAP Divide: Costs, Adjustments, and Strategy

HEI’s GAAP net income fell to $26.67 million in Q1 2025, down from $42.12 million in the prior year, as wildfire-related expenses and non-core losses weighed on results. The $13 million pretax loss from the Hamakua Energy subsidiary sale and $16.9 million in wildfire costs—partially offset by $6.7 million in insurance recoveries—drove the gap between GAAP and Non-GAAP metrics. However, the regulated utility subsidiary, Hawaiian Electric Company, posted a 23% rise in net income to $48 million, fueled by higher revenues and operational improvements.

The company’s focus on cost discipline shone through: a $5 million improvement in fuel efficiency and $1 million in operational savings offset rising wildfire mitigation costs. Notably, the average fuel oil cost per barrel dropped 14% year-over-year to $104.55, easing pressure on power generation expenses.

Regulatory Wins and Wildfire Liabilities

Hawaiian Electric’s Q1 results are inseparable from its ongoing wildfire-related challenges. The Maui wildfire settlement, approved by Hawaii’s Supreme Court, will begin payments in early 2026. To prepare, HEI reduced holding company debt by $384 million in April 2025 using proceeds from American Savings Bank’s sale, bolstering liquidity.

Legislative action in Hawaii further eased uncertainty. The passage of HB 1001, SB 897, and SB 1501 provided critical support:
- State funds will cover wildfire litigation settlements.
- A liability cap for future wildfire damages protects the utility.
- Securitization of wildfire safety costs shields customers from steep rate hikes.
- Clean energy procurement remains prioritized, aligning with Hawaii’s 100% renewable portfolio standard by 2045.

These moves, coupled with the PUC’s approval of deferred wildfire costs, reduce financial and operational volatility, allowing HEI to reinvest in grid resilience and decarbonization.

Revenue Growth and Analyst Outlook

Analysts had anticipated HEI’s Q1 Non-GAAP EPS of $0.23 and now project $1.01 EPS for fiscal 2025, a 3% rise from 2024. While this trails the S&P 500’s 8% projected growth, HEI’s 2026 outlook of 4% aligns with its strategic recovery plan. Revenue for the full year is expected to hit $3.43 billion, a 6.4% increase from 2024, driven by regulated utility growth and clean energy investments.

Risks and the Road Ahead

HEI’s path remains fraught with risks. Wildfire liabilities, though partially mitigated by legislation, could still strain cash flow. Regulatory approvals for securitization and rate adjustments are critical, as are global energy cost trends. Yet the company’s actions—reducing debt, securing legislative backing, and investing in renewables—suggest a deliberate strategy to stabilize its financial footing.

Conclusion: A Steady Hand in Turbulent Skies

Hawaiian Electric’s Q1 results reflect a company navigating turbulence with discipline. While GAAP metrics lagged due to one-time hits, its core utility business grew steadily, and legislative wins have reduced existential threats. The $384 million debt reduction and 14% drop in fuel costs underscore operational focus, while the Maui settlement framework provides clarity.

Investors should note that HEI’s 6.4% revenue growth projection outpaces its 3% EPS growth, signaling margin pressures. Yet its alignment with Hawaii’s clean energy goals—bolstered by falling fuel costs and grid investments—positions it to capitalize on long-term demand for reliable, sustainable power.

Final Take: Hawaiian Electric is far from a high-growth story, but its ability to stabilize amid unprecedented challenges—and its regulatory tailwinds—suggests it’s building a foundation for sustainable, if modest, growth. For income-focused investors, the $10 million dividend maintained in Q1 and HEI’s strategic discipline may justify a cautious “hold” rating. The next critical test? Securing final approvals for wildfire cost securitization—and proving that Hawaii’s energy transition can be both clean and financially stable.