May 08--Strong earnings growth at its utility subsidiary was the main driver behind a 36 percent gain in Hawaiian Electric Industries' first quarter net income, the company reported Wednesday.
HEI earned $45.9 million, or 45 cents a share in the first quarter, up from $33.7 million, or 34 cents a share during the same three-month period in 2013.
Hawaiian Electric Co. led the way with net income of $35.4 million for the January-through-February period, up 45 percent from $24.4 million in the same quarter a year earlier. HEI reported financial results for its American Savings Bank subsidiary on April 30. The bank's net income rose 2.7 percent in the first quarter.
HECO's profits were boosted by a reduction in operation and maintenance expenses and a gain in revenue from a charge levied on ratepayers to cover the cost for investments in clean energy and system reliability, according to a news release from HEI.
The utility is able to recover costs between formal rate cases through a charge on customers' bills under a new rate-setting mechanism known as "decoupling." The system, put into place in 2011 and 2012, is designed to encourage the development of renewable energy and energy conservation by guaranteeing HECO and its subsidiary utilities enough revenue to cover their fixed costs if their electricity sales decline.
HECO's $6 million increase in net revenue in the first quarter included $8 million related to decoupling that was not present in the year-earlier quarter. The $8 million gain was partly offset by a $1 million loss due to the reduced fuel efficiency of oil-fired generators on Oahu that had to be operated at lower levels in part to integrate more renewable energy into the grid, according to the utility.
"One of the intended objectives of the decoupling model was to improve the financial integrity of the utilities so that the necessary investments could be made to facilitate the transition to clean energy and to attract renewable-energy developers with lower cost financing based on the credit of a financially strong utility," HEI Chief Executive Officer Constance Lau told stock market analysts in a conference call following the earnings release.
Lau also said HECO's deactivation of five older, less-efficient oil-burning generating units in 2013 and 2014 will save the utility between $7 million and $9 million a year. That includes the Honolulu Power Plant near Aloha Tower Marketplace that HECO took out of service in January.
At HEI's annual meeting Wednesday several shareholders questioned Lau about a recent flurry of rulings from the state Public Utilities Commission directing HECO to move more aggressively in accommo- dating greater amounts of renewable energy, particularly rooftop photovoltaic systems.
A representative from the Oahu chapter of the Sierra Club, who attented the meeting, presented HEI executives a petition with 6,000 signatures asking HECO to improve its system for allowing owners of PV systems to connect with the utility's power grids.
Several dozen HECO customers picketed on the sidewalk along Alakea Street outside one of the entrances to the HEI headquarters.
"Hawaiian Electric has stalled too long on planning for customer demand for rooftop solar," said Nancy Robberson, a solar customer from Maui. "I have friends and neighbors who have been waiting for months and years to get their solar turned on. It's time for transparency and real action on grid upgrades and approval process overhauls."
Lau told shareholders HECO officials "feel the same urgency" as the PUC in modernizing the utility's grids to accept more solar power.
"It's absolutely clear to us, solar makes a lot of sense," Lau said. She said that nearly 3,500 customers of HECO and its sister utilities in Maui and Hawaii counties connected their PV systems to the grid in the first quarter. That compares with 4,600 customers in the first quarter of 2013.
HEI shares rose 63 cents, or 2.7 percent, to close at $23.85 Wednesday on the New York Stock Exchange after the earnings were announced.
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