Moody's revised its outlook on Hawaiian Electric Industries Inc. to positive from stable based on the progress that its Hawaiian Electric Co. Inc. utility has made in its transition to renewable power resources.
The rating agency also affirmed Hawaiian Electric Industries' P-3 commercial paper rating and Hawaiian Electric Co.'s Baa2 senior unsecured rating and P-2 commercial paper rating.
The rating is still lower than most regulated utilities in the U.S. because of the utility's strained relationship with the Hawaiian Public Utilities Commission over the pace of its transition to renewable energy sources from fossil fuel-burning generation assets, Moody's said in an Oct. 21 action.
Since the cost of renewable generation has fallen considerably over the years, the move to clean energy resources has accelerated. The Hawaiian Electric utilities issued a request for proposals in August for 932 MW, including energy storage capabilities, from renewables. Hawaii has a goal of getting all retail sales of electricity from renewable resources by 2045.
Meanwhile, the commission is conducting the second phase of a proceeding on performance-based regulation that is scheduled to conclude with a decision at the end of 2020.
Moody's views the conclusion of the proceedings as a credit positive. "HECO has made considerable strides in its transition to renewable energy and improved customer service," Moody's Vice President and Senior Credit Officer Toby Shea said in a news release Oct. 21. "The company's ratings could be upgraded if HECO receives a credit supportive outcome associated with the second phase of its ongoing performance based ratemaking proceeding."
Hawaiian Electric Co. accounted for 75% of Hawaiian Electric Industries' consolidated operating income over the past three years and 75% of its consolidated debt as of June 30.