Hawaiian Electric Industries (NYSE:HE) reported that the utilities of its subsidiary Hawaiian Electric Company (HECO) invested over $60m in local infrastructure during 1Q13 – approximately 2.5 times their earnings for the same period in 2012 – as part of the company’s effort to modernize the electric grid, incorporate more renewable energy and reduce the islands’ dependence on oil-fired generation.
”Our utilities are constantly seeking ways to add more lower-cost renewable energy,” Connie Lau, Hawaiian Electric Industries (HEI) president and CEO said during the company’s 1Q13 earnings call May 8. “As a result of their efforts, they are currently evaluating a number of viable, renewable energy proposals that are priced lower than the existing cost of our oil-fired generation.”
Since the end of 2010, oil price increases have accounted for $50 of the $60 increase in the typical Oahu customer’s electric bill.
HEI has three utilities under the HECO umbrella: Hawaiian Electric, which serves the island of Oahu; Maui Electric Company (MECO), which serves Maui; and Hawaii Electric Light Company (HELCO), which serves the Big Island. Together, they provide electricity to approximately 450,000 customers representing 95% of the state’s population.
Lau noted that, in 2012, the combined electric companies reached a record 13.9% of energy needs from renewable generation and are currently on track to exceed the next clean energy goal of 15% in 2015.
HECO and its subsidiaries continue to evaluate opportunities with developers of proposed projects to integrate power into its grid from a variety of renewable energy sources, including solar, biomass, wind, ocean thermal energy conversion, wave, geothermal and others, according to HEI’s 1Q13 Form 10-Q filed with the U.S. SEC. Projects also include Hawaiian Electric’s plan to integrate wind power into the Oahu electrical grid that would be imported via a yet-to-be-built undersea transmission cable system from a large wind farm proposed to be built on the island of Lanai.
However, Lau acknowledged that the proposed inter-island transmission line will likely not be built in the immediate future, and will not likely trigger the need for additional equity in 2015.
“It’s unlikely, if it did go forward, that it would go forward that quickly,” Lau said.
Overall, Hawaiian Electric reported net 1Q13 income of $24.4m, compared to $27.3m during 1Q12. Company officials said the decreased net income was due to a $6m increase in operating and maintenance and depreciation expenses, partially offset by a $2m recovery of additional costs for reliability and clean energy investments.
In addition to the utilities, HEI also owns American Savings Bank, and holding companies and other subsidiaries including HECO Capital Trust III, Renewable Hawaii, and Uluwehiokama Biofuels.
American Savings Bank’s net income for 1Q13 was $14.1m compared to $15.9m in 1Q12, while the holding and other companies’ net losses were $4.9m in 1Q13 consistent with 1Q12.