Hawaiian Electric Industries Inc. executives said during an Aug. 2 earnings call that its utility subsidiaries are well on track to transition to 100% renewable energy by 2045, and that they are comfortable with the framework laid out by state regulators to move toward performance-based regulations.
Hawaii Electric Light Co. Inc., Hawaiian Electric Co. Inc. and Maui Electric Co. Ltd., collectively known as Hawaiian Electric Cos., in July announced a plan to procure 900 MW of renewable energy.
Hawaiian Electric President, CEO and Director Constance Lau said the company is moving forward with requests for proposals for 900 MW of renewables, 500 GWh of storage and grid services, "making this among the largest renewable energy and integrated procurements ever launched by a U.S. utility." If approved, the projects are expected to come online between 2022 and 2025, so long as they do not run up against opposition from local communities, which can run high in the state. The company is on track to meet its goal of reaching 30% renewable generation by 2020, she said.
The Hawaii Public Utilities Commission is implementing performance-based regulations that will replace cost-of-service regulation.
"Throughout the PBR proceeding the commission has consistently underscored the importance of maintaining the financial integrity of the utility and that is one of the three guiding principles for phase two along with a customer-centered approach and administrative efficiency," Lau said.
Executives assured investors that the regulatory goals align with the company's strategic goals, including affordability, cost-containment, customer engagement, greenhouse gas reduction, distributed generation, electrification of transportation and resilience. The utility must file a proposal with the commission about how to implement PBR on Aug. 14.
"As we've said for a while the devil will be in the details," Lau said.
The company is seeking solar and storage projects to replace power from the 180-MW, coal-fired AES Hawaii, the largest plant on the utility's system, which is scheduled to close in 2022. The company must also replace power from the 32-MW Kahului oil-fired plant on Maui, which is scheduled to close at the end of 2024. Hawaii in 2015 passed a law mandating utilities transition to 100% renewable power by 2045.
The commission in 2019 rejected two of the company's battery storage proposals, reducing projected 2019 capital spending by $30 million, to $370 million. That reduction will have no impact on proposed 2019 rate-based growth in 2019, executives said, but the company's rate base will be about $50 million lower in 2020 than previous expectations.
Planned investment of $150 million in 2019 and 2020 on grid reliability and resiliency will help close the capital spending gap created by the rejection of the battery projects, executives said.
The company reported net income for common stock of $42.5 million, or 39 cents per share, missing the S&P Global Market Intelligence consensus estimate of 43 cents per share. The results represented a decline from $46.1 million, or 42 cents per share, in the second quarter of 2018. The company's operating income was $715.5 million, a year-over-year improvement from $685.3 million.