Business Context and Reporting Period
This Form 8-K Current Report was filed by Hawaiian Electric Industries, Inc. (HEI) and Hawaiian Electric Company, Inc. (Hawaiian Electric) on July 27, 2026. The filing discloses the entry into a material definitive agreement regarding a new Power Purchase Agreement (New PPA) with Kalaeloa Partners L.P.
Key Financial Metrics and Agreement Terms
The New PPA governs the purchase of 208 megawatts (MW) of firm capacity renewable dispatchable generation for a 30-year term following the commercial operation date. Key financial terms include:
- Capacity Charge: Reduced to $93/kW per year (down from $100/kW under the prior agreement).
- Variable O&M Charge: $0.004/kWh (in 2023 dollars), escalating with the GDP implicit price deflator (GDPIPD).
- Fixed O&M Charge: $96/kW per year (in 2023 dollars), escalating with GDPIPD.
- Overhaul Component Charge: $300/hour per combustion turbine unit operated, plus $200 per start (20 starts x $200) per month, escalating with GDPIPD.
The filing does not provide specific revenue, profit, cash flow, or debt metrics for the reporting period, as this is a transactional disclosure rather than a periodic financial report.
Material Changes Versus Prior Period
The New PPA replaces the Amended and Restated Power Purchase Agreement dated October 2021, which is expected to terminate in early 2033. Material changes include:
- Cost Reduction: A decrease in the fixed capacity charge from $100/kW to $93/kW.
- Renewable Qualification: The agreement facilitates the repowering of the facility to allow fuel flexibility and qualify as renewable energy under Hawaii Renewable Portfolio Standards Law.
- Structure Update: Revised pricing and structure for operations and maintenance charges compared to the prior agreement.
Guidance, Outlook, Risks, and Contingencies
Conditions Precedent: The effectiveness of the New PPA is contingent upon the issuance of an order by the Public Utilities Commission of the State of Hawaii (PUC) approving the agreement. Until conditions are satisfied, the agreement may be declared null and void.
Termination Triggers: Either party may void the agreement if PUC approval is not received within 12 months of application (or 24 months if appealed). Hawaiian Electric may void the agreement if Kalaeloa breaches representations or covenants causing a material adverse effect or increased risk.
Forward-Looking Statements: The filing includes standard disclaimers that future performance is subject to risks, uncertainties, and assumptions. Investors are directed to the Risk Factors in the 2025 Form 10-K and the 2026 Form 10-Q for detailed risk disclosures.
Important Facts for Investor Verification
- Verify the status of the PUC application and the timeline for approval, as the agreement is not yet effective.
- Confirm the specific fuel flexibility mechanisms and renewable energy certification processes required under the New PPA.
- Monitor the full text of the New PPA, which will be filed as an exhibit to the Form 10-Q for the quarter ending September 30, 2026.
- Review the escalation mechanisms tied to the GDPIPD to understand long-term cost exposure.