Hawaiian Electric Industries (HE) Q1 2025 Earnings Signal Progress Amid Wildfire Litigation and Regulatory Tailwinds

Hawaiian Electric Industries, Inc. (NYSE: HE) reported a cautiously optimistic Q1 2025 earnings call, highlighting progress in resolving legacy liabilities, advancing grid modernization, and leveraging regulatory support. While challenges such as wildfire litigation remain unresolved, the company’s strategic restructuring and legislative wins position it for long-term resilience.

Strategic Restructuring Bolsters Financial Flexibility

HEI has repositioned itself as a “simpler, more focused utility business” following the sale of 90.1% of its non-core subsidiary American Savings Bank (ASB) and the winding down of Pacific Current, its distributed energy resources unit. These moves, combined with cost controls and an at-the-market equity program, have strengthened the company’s financial footing. The Q1 results reflect this focus, with proceeds from the ASB sale and capital raises providing liquidity to fund its ambitious $190 million five-year grid resilience plan.

Grid Modernization and Wildfire Mitigation Take Center Stage

HE’s capital expenditures (capex) in Q1 2025 prioritized wildfire safety, with investments in grid hardening, AI-driven situational awareness systems, and vegetation management. Over 35% of its 2024 capex was allocated to wildfire mitigation, a trend expected to continue. The company emphasized that these measures have already reduced wildfire risk, with improved safety protocols now in place.

Wildfire Litigation Settlement Moves Closer to Resolution

Progress on the Maui wildfire tort litigation was a key highlight. Definitive settlement agreements were signed in November 2024, and a favorable Hawaii Supreme Court ruling in February 2025 resolved subrogation disputes. The Hawaii Legislature’s passage of House Bill 1001, allocating $807 million to fund the state’s share of the settlement, brings finality closer. If Governor Josh Green signs the bill into law, the company expects to make its first settlement payment by early 2026.

Regulatory Tailwinds Support Affordability and Decarbonization

Legislative actions in Hawaii are further easing HE’s path:
1. Senate Bill 897: Establishes a liability cap for future wildfire damages and allows securitization to finance grid improvements, shielding customers from cost overruns.
2. Senate Bill 1501: Provides financial backstops for renewable energy projects, critical to Hawaii’s goal of 100% renewable energy by 2045.

These measures align with HE’s decarbonization goals, which include net-zero emissions by 2045.

Risks and Challenges Remain

Despite progress, risks linger. Over 400 tort lawsuits and 160 subrogation claims from the 2023 wildfires remain unresolved. A Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) investigation into the fire’s cause, expected by August 2025, could reintroduce uncertainty. Additionally, while the $807 million state appropriation is pivotal, delays in Governor Green’s approval or judicial setbacks could prolong financial strain.

Conclusion: A Steady Hand Navigating Regulatory and Legal Crosscurrents

HEI’s Q1 2025 results reflect a company navigating complex challenges with strategic clarity. The divestiture of non-core assets has freed capital for grid modernization, while legislative support has mitigated risks. With the Maui wildfire settlement nearing resolution and $807 million in state funding on the horizon, the company is well-positioned to advance its decarbonization targets.

However, investors must remain cautious. Litigation outcomes and regulatory approvals remain critical variables. The stock’s 12-month performance, which has underperformed the S&P 500 by 15% due to litigation concerns, could rebound if the settlement is finalized and wildfire mitigation costs are securitized.

In the long term, HE’s focus on grid resilience and clean energy aligns with Hawaii’s decarbonization mandates, offering a stable growth trajectory. For now, the path forward hinges on resolving the Maui litigation—a milestone that could unlock sustained investor confidence.

Data as of May 2025. Past performance does not guarantee future results.