Hawaiian Electric Industries Inc.’s earnings fell 12 percent in the second quarter, as its utilities saw a decrease in profits.
HEI, parent company of American Savings Bank and three major electrical utilities in the state, said Thursday its second-quarter earnings fell to $38.7 million, or 36 cents a share, compared with $44.1 million, or 41 cents a share, in the second quarter a year ago. HEI’s revenue increased to $632 million from $566 million in the same period of 2016.
“Overall, 2017 is a transitional year at the utility,” said Constance Lau, HEI president and chief executive officer, during an earnings call Thursday noting both the bank and utility subsidiaries performed as expected.
| SECOND-QUARTER NET
$38.7 million
YEAR-EARLIER NET
$44.1 million
|
Profit for HEI’s utility subsidiaries, collectively referred to as Hawaiian Electric Co., fell to $25.6 million in the second quarter, compared with $35.9 million in the same period last year.
Higher operation and maintenance expenses; increased investments in connecting more renewable energy to the utilities’ grids; and a change in the way the utilities record cash collections for a portion of their revenue led to the decrease in profits.
“Our utilities continue to bring more renewable resources online, strengthen our energy delivery networks to make them more reliable and resilient and promote sustainable communities,” Lau said in a prepared statement.
Through its electrical utilities — Hawaiian Electric Co. on Oahu, Hawaii Electric Light Co. on the Big Island and Maui Electric Co. — HEI provides power to approximately 95 percent of Hawaii’s population.
Lau said the drop in profit was due in part to a change in the way the utility reports a portion of its revenue. The Public Utilities Commission previously allowed the utility to record revenue from what is known as its “rate adjustment mechanism” on a calendar-year basis. That revenue is now being recorded on a May 31 fiscal year basis.
The change was the primary reason for a $5 million net revenue decline for the utilities. The change did not affect cash collections, HEI said.
Overall utility revenue for the quarter was $556.8 million, compared with $495.3 million the year prior. While the electrical utilities saw a 12 percent increase in revenue for the quarter, they also saw an 18 percent increase in expenses.
Utility expenses were $501.8 million compared with $424.7 million.
The utilities paid more for fuel in the second quarter 2017 compared with the same period the year prior.
The amount the electrical utilities paid for fuel in the second quarter increased by 53.7 percent to $141.2 million compared with $91.8 million in the second quarter of 2016. The average price the utilities paid for a barrel of oil during that period increased to $69.86 from $44.98 in 2016.
The electrical utilities also paid more for power purchased from outside vendors in the quarter compared with the same period a year ago. Purchased power cost $153 million in the second quarter, compared with $139 million in the second quarter of 2016.
Other operation and maintenance expenses increased by $6.8 million, to $106.3 million from $99.5 million in the same quarter of 2016.
HEI’s bank subsidiary, American Savings Bank, reported a profit of $16.7 million, up from $13.3 million in the second quarter of 2016.
“At the bank, we continued our strong performance through the second quarter with higher returns for improving credit quality, higher yields and greater efficiency,” Lau said.
