Hawaiian Electric Industries Inc. (HE) 2016年年度報告「NYSE」.pdf

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1、At HEI and our subsidiaries Hawaiian Electric Company(Hawaiian Electric)and American Savings Bank(American),we strive to be a catalyst for a better Hawaiifor a stronger economy,a cleaner environment and a thriving communitywhile delivering long-term value for our shareholders.By investing in renewab

2、le energy technologies,supporting electrification of transportation and creating new customer options such as time-of-use rates and demand response programs,we create local jobs and build customer value.By helping to lower fossil fuel use,we increase Hawaiis energy independence,keep more dollars in

3、the state and lower our carbon footprint.By making loans to Hawaiis families and companies,we provide capital to help local businesses grow and families fulfill their dreams.And through the active involvement of our employees in our communities and our corporate and employee charitable contributions

4、,we promote a more resilient local community.catalyst an agent that causes or accelerates significant change or action 2016ECONOMYMore than$1.8 billion in loans to Hawaii consumers and businessesOver$318 million invested in modernizing and improving Hawaiis electric grids and in integrating more ren

5、ewable energyENVIRONMENTApproximately 26%of our customers energy needs were powered by renewables,with 54%on Hawaii Island and 37%for Maui CountyAdded 99 MW of renewable energy from solarAvoided 2.2 million barrels of imported oil,which would have cost our state$119 millionCOMMUNITYOver$2.3 million

6、in charitable contributionsMore than 22,000 volunteer hours20 electric vehicles donated to help nonprofits fulfill their mission while reducing their carbon footprint OUR VISION1OUR INVESTMENTS IN HAWAII CATALYZE BENEFITS FOR OUR CUSTOMERS,OUR EMPLOYEES,OUR ECONOMY AND OUR STATE AND CREATE VALUE FOR

7、 OUR SHAREHOLDERS.Invest in Hawaii Economy EnvironmentCommunityCreate shareholder valueFoster innovationDevelop employees and leadersDeliver customer value 2DEAR FELLOW SHAREHOLDERS,2016 was a memorable year for HEI.Following the termination of our proposed merger with NextEra Energy,Inc.and cancell

8、ation of the spin-off of American(together,the Transactions),HEI and its operating companies are moving forward as an independent consolidated enterprise providing essential electricity and banking services for Hawaii and investing in the growth of our states economy.As one of the largest public com

9、panies in Hawaii,we are well-positioned to achieve our goals and create long-term value for our customers,community,employees and shareholders.CONTINUED LEGACY OF CREATING SHAREHOLDER VALUEIn 2016,our consolidated companies generated$248.3 million in net income and core net income of$190.1 million(a

10、fter adjusting for income and expenses related to the Transactions),resulting in diluted earnings per share(EPS)of$2.29 and core EPS of$1.75.We also delivered a return on average common equity(ROE)for the year of 12.4%,with a core ROE of 9.5%.In addition,2016 was our 116th year of paying uninterrupt

11、ed dividendsone of the longest records for publicly traded companies.And we ended 2016 with an attractive dividend yield of 3.7%.AMERICAN SAVINGS BANKIn 2016,American continued its focus on delivering profitable growth,managing risk and improving efficiency.American provided approximately$1.8 billio

12、n of credit to consumers and businesses last year and originated more than 3,500 mortgages,“WITH OUR UNIQUE COMBINATION OF COMPANIES WE WILL CONTINUE TO MOVE FORWARD AS AN INDEPENDENT ENTERPRISE PROVIDING LONG-TERM VALUE FOR OUR CUSTOMERS,COMMUNITIES,EMPLOYEES AND SHAREHOLDERS.”CATALYST FOR A BETTER

13、 ECONOMYHawaiian Electric Company has a 100%market share for 95%of Hawaii,and operates 3 utilities on 5 separate grids.American Savings Bank is the 3rd largest bank in Hawaii with$6 billion in assets and 51 branches across the state.3HAWAIIAN ELECTRIC INDUSTRIES /2016 ANNUAL REPORTAt American Saving

14、s Bank,we see ourselves as more than just bankerswe help make peoples dreams possible.Our business has always focused on serving and investing in Hawaiis families,businesses and communities.Constance H.LauHEI President and Chief Executive Officer CUSTOMER FOCUSEmphasis on making banking easy for cus

15、tomers INNOVATIONInvesting in technology to enhance service and convenienceBEST PLACES TO WORKHawaii Business Magazines“Best Places to Work”list in 2016 and has made the list 7 years in a rowDIVERSITYOne of Fortunes“50 Best Workplaces for Diversity in America”supporting the growth of Hawaii business

16、es and enabling the dreams of Hawaii households.American also continued to drive innovation to make banking easy for customers.The first Hawaii bank to introduce remote-deposit capture with a mobile banking application,American in 2016 launched a new e-Banking platform to bring additional best-in-cl

17、ass features to businesses and consumers.American continues to garner local and national awards for its outstanding workplace culture.American was named one of the Best Places to Work in Hawaii by Hawaii Business magazine for the seventh consecutive year and one of the Best Banks to Work For in the

18、country by American Banker for the fourth consecutive year.American continues to be the only Hawaii bank to ever make the national list.American broke ground on its new campus in February of 2017,catalyzing new development in Honolulus Chinatown neighborhood,promoting greater operational efficiency

19、and opening up new opportunities for collaboration among employees and with customers and the community.4HAWAIIAN ELECTRIC COMPANY Hawaiian Electric has made great strides toward achieving Hawaiis 100%renewable portfolio goal targeted for 2045.In 2016,Hawaiian Electric and its subsidiaries invested

20、more than$318 million in infrastructure projects to modernize and improve Hawaiis electric grid and to reliably integrate more renewable energy.Weve partnered with start-ups and innovators across the energy ecosystem to seek out and test new technologies for energy storage,grid operations and other

21、applications.And in collaboration with community stakeholders,we filed updated Power Supply Improvement Plans,presenting a proposed path to meet Hawaiis 100%renewable goal ahead of the 2045 deadline.Hawaiian Electric is collaborating with stakeholders throughout our state and partners around the wor

22、ld to advance electrification of transportation in Hawaii.Along with renewable generation,transportation electrification is essential to achieving energy independence and a lower carbon footprint for Hawaii.CATALYST FOR A BETTER ENVIRONMENTHokuleaHAWAIIAN ELECTRIC COMPANIES RENEWABLE PORTFOLIO STAND

23、ARD PROGRESS30.0%25.0%20.0%15.0%10.0%5.0%0.0%25.8%23.2%21.3%18.2%13.9%12.0%9.5%9.5%200920102011201220132015201620202014 Private,Grid-connected renewables Biomass(including municipal solid waste)Geothermal Utility-scale Photovoltaic and Solar Thermal Hydro Wind BiofuelsEXCEEDED 2015 GOAL OF 15%ON COU

24、RSE TO EXCEED 2020 GOAL OF 30%5HAWAIIAN ELECTRIC INDUSTRIES /2016 ANNUAL REPORTWere seeing results from our hard work and investment in Hawaiis energy infrastructure.In 2016,approximately 26%of our combined customers energy needs on all the islands we serve were powered by renewable sources,with hig

25、her percentages for Maui County and Hawaii Island of 37%and 54%,respectively.Our efforts this past year enabled us to avoid the equivalent of 2.2 million barrels of imported oil.We continue to lead the nation in the integration of customer-sited private solar,with the highest percentage of customers

26、 with solar of any utility in the country.More than 15%of our total customersincluding an estimated 26%of single family homeshad private solar in place by the end of 2016,with an additional 3%of single family homes approved for installation.HAWAIIAN ELECTRIC COMPANIES CUMULATIVE PRIVATE SOLAR GROWTH

27、PV Installations PV Installations Installed PV(MW)75,000650Installed PV(MW)60,00048045,00036030,00024015,00012000201658669,817201548760,522201438950,985201330140,159201217122,55020117910,4242010405,107200924HEI is a proud patron of the voyaging canoe Hokuleas journey around the world.The voyage name

28、,Malama Honua,means“to care for our Earth.”Hokulea is joined by Hikianalia,a solar and wind powered canoemerging the wisdom of Hawaiis voyaging ancestors with modern technologyas they traverse the planet in a mission of exploration,discovery and sustainability for our“island”earth.HikianaliaWhile we

29、 work to bring new renewable energy online,we remain focused on delivering customer value at a reasonable cost.Toward that end,we are offering new customer options,such as time-of-use pricing and demand response programs,and rolling out new interactive customer tools.At the same time,we continue to

30、seek ways to improve efficiency by the consolidation of tri-company utility functions.Hawaiian Electric has also been leading the way toward the electrification of transportation in our state.Approximately two-thirds of fossil fuel brought to Hawaii is for transportation,so addressing the transporta

31、tion sector is essential to reducing our states carbon footprint.Our Power Supply Improvement Plans include action plans for electrification of transportation,further reducing the use of fossil fuels in Hawaii.2,8996CATALYST FOR A BETTER COMMUNITYThis unique annual event by American affords particip

32、ants the opportunity to experience the sport of curling alongside Olympic athletes while raising money for a local community partner.This year the beneficiary was Kupus Hawaii Youth Conservation Corps Community Program.CURLING FUNDRAISER The spirit of giving this holiday season brought together our

33、HEI and Hawaiian Electric employees to donate over 3,600 lbs.of food to the Hawaii Food Bank.Seeds of Service is Americans teammate volunteer program,which encourages support of community service to benefit schools and other nonprofit organizations in neighborhoods throughout Hawaii.Hawaiian Electri

34、c employees volunteer on many service projects that promote environmental stewardship,including restoring a native forest and loi kalo,reviving an ancient Hawaiian fishpond and restoring a native wetland bird habitat.FOOD DRIVE SEEDS OF SERVICEENVIRONMENTAL STEWARDSHIP7COMMITTED TO OUR COMMUNITIESOu

35、r companies unwavering commitment to our local communities continued last year,with our contribution of more than$2.3 million in charitable donations.I am proud of the compassion and energy of our employees,who collectively devoted more than 22,000 volunteer hours to community organizations in 2016.

36、One of our exciting community initiatives in 2016 was our donation of 20 electric vehicles to nonprofits in the three counties our utilities serve.Were pleased that we could blend our focus on electrification of transportation with our support of local nonprofits.MOVING FORWARDWe are well positioned

37、 for the future with the wise guidance of our board,the exemplary work of our executive team and the commitment of our talented employees.It is with deep gratitude that in 2016 we bade aloha to Maury Myers,who served on our Constance H.LauPresident and Chief Executive Officer Hawaiian Electric Indus

38、tries,Inc.board for more than 20 years,and Chet Richardson,our Executive Vice President,General Counsel,Secretary&Chief Administrative Officer for over nine years.As we enter 2017,we welcome Richard Dahl to our board and prepare for the retirement of Jim Ajello,our Executive Vice President&Chief Fin

39、ancial Officer for eight years,who will be succeeded by Greg Hazelton.We are fortunate that we will continue to benefit from Jims counsel going forward,as he will join Americans board upon retiring from HEI.With our unique combination of companies,we will continue to move forward as an independent e

40、nterprise providing long-term value for our customers,communities,employees and shareholders.On behalf of everyone at HEI,Hawaiian Electric and American,I offer a sincere mahalo to all of our shareholders for your continued support as we pursue a vibrant and sustainable future for our company and ou

41、r state.Aloha,In an effort to promote electric vehicle usage while supporting our community,the HEI Charitable Foundation donated 20 electric vehicles to local charities on Oahu,Hawaii Island and Maui,including University of Hawaii campuses.HAWAIIAN ELECTRIC INDUSTRIES /2016 ANNUAL REPORTEVs FOR A B

42、ETTER HAWAII 8TOTAL RETURN(percent)Source:S&P Global Inc./HEI NYSE symbol:HEHEIS&P 500 IndexEdison Electric Institute(EEI)IndexKBW Regional Banking Index201618.712.017.439.03-Year43.829.045.550.85-Year55.598.267.8150.810-Year100.095.7106.141.7Sources:S&P Global Inc.and EEIDIVIDEND YIELD(percent)EEI

43、Index?HEI6420143.33.73.43.7153.84.316134.04.8124.34.9FINANCIAL HIGHLIGHTSYEARS ENDED DECEMBER 31 201620152014(dollars in millions,except per share amounts)Operating income$348$323$333Net income(loss)for common stock by segmentElectric utility142136138Bank575551Other49(31)(21)Net income for common st

44、ock 248160168Core1 net income for common stock190176173Diluted earnings per common share2.291.501.63Core1 diluted earnings per common share1.751.651.68Return on average common equity 12.4%8.6%9.6%Core1 return on average common equity 9.5%9.4%9.8%Dividends per common share 1.241.241.24Annual dividend

45、 yield23.7%4.3%3.7%Common shares(millions)December 31108.6107.5102.6Weighted-average basic108.1106.4102.0Weighted-average diluted108.3 106.7 102.9(1)Non-GAAP measure that excludes after-tax merger and spin-off related income and costs.See Appendix B to this 2016 Annual Report to Shareholders for the

46、 reconciliation of GAAP to non-GAAP measures.(2)At December 31.HAWAIIAN ELECTRIC INDUSTRIES,INC.2016 Annual Report to ShareholdersUNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549FORM 10-KX ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THESECURITIES EXCHANGE ACT OF 1934For the fi

47、scal year ended December 31,2016 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OFTHE SECURITIES EXCHANGE ACT OF 1934CommissionFile NumberRegistrant;State of Incorporation;Address;and Telephone NumberI.R.S.EmployerIdentification No.1-8503HAWAIIAN ELECTRIC INDUSTRIES,INC.,a Hawaii corporation100

48、1 Bishop Street,Suite 2900,Honolulu,Hawaii 96813Telephone(808)543-566299-02080971-4955HAWAIIAN ELECTRIC COMPANY,INC.,a Hawaii corporation900 Richards Street,Honolulu,Hawaii 96813Telephone(808)543-777199-0040500Securities registered pursuant to Section 12(b)of the Act:RegistrantTitle of each classNam

49、e of each exchangeon which registeredHawaiian ElectricIndustries,Inc.Common Stock,Without Par ValueNew York Stock ExchangeHawaiian ElectricCompany,Inc.Guarantee with respect to 6.50%Cumulative QuarterlyIncome Preferred Securities Series 2004(QUIPSSM)of HECO Capital Trust IIINew York Stock ExchangeSe

50、curities registered pursuant to Section 12(g)of the Act:RegistrantTitle of each classHawaiian Electric Industries,Inc.NoneHawaiian Electric Company,Inc.Cumulative Preferred StockIndicate by check mark if the registrant is a well-known seasoned issuer,as defined in Rule 405 of the Securities Act.Hawa

51、iian Electric Industries Inc.Yes X No Hawaiian Electric Company,Inc.Yes No X Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d)of the Act.Hawaiian Electric Industries Inc.Yes No X Hawaiian Electric Company,Inc.Yes No X Indicate by check m

52、ark whether the registrant(1)has filed all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934 during the preceding 12 months(or for such shorter period that the registrant was required to file such reports),and(2)has been subject to such filing requirements for

53、 the past 90 days.Hawaiian Electric Industries Inc.Yes X No Hawaiian Electric Company,Inc.Yes X No Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site,if any,every Interactive Data File required to be submitted and posted pursuant to Rule 4

54、05 of Regulation S-T(232.405 of this chapter)during the preceding 12 months(or for such shorter period that the registrant was required to submit and post such files).Hawaiian Electric Industries Inc.Yes X No Hawaiian Electric Company,Inc.Yes X No Indicate by check mark if disclosure of delinquent f

55、ilers pursuant to Item 405 of Regulation S-K(section 229.405 of this chapter)is not contained herein,and will not be contained,to the best of registrants knowledge,in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K

56、.Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer or a smaller reporting company.See the definitions of“large accelerated filer,”“accelerated filer”and“smaller reporting company”in Rule 12b-2 of the Exchange Act.Hawaiian Electric

57、 Industries Inc.Large accelerated filer X Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company)Smaller reporting company Hawaiian Electric Company,Inc.Large accelerated filer Accelerated filer Non-accelerated filer X(Do not check if a smaller reporting company)Smaller

58、 reporting company Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Exchange Act).Hawaiian Electric Industries Inc.Yes No X Hawaiian Electric Company,Inc.Yes No X Aggregate market valueof the voting and non-voting common equityheld by non-affiliates of

59、the registrants as ofNumber of shares of common stock outstanding of the registrants as of June 30,2016June 30,2016February 13,2017Hawaiian Electric Industries,Inc.(HEI)$3,547,453,796108,187,063(Without par value)108,745,265(Without par value)Hawaiian Electric Company,Inc.(Hawaiian Electric)None15,8

60、05,327($6 2/3 par value)16,019,785($6 2/3 par value)DOCUMENTS INCORPORATED BY REFERENCEHawaiian Electrics Exhibit 99.1,consisting of:Hawaiian Electrics Directors,Executive Officers and Corporate GovernancePart IIIHawaiian Electrics Executive CompensationPart IIIHawaiian Electrics Security Ownership

61、of Certain Beneficial Owners and Management and Related Stockholder Matters Part IIIHawaiian Electrics Certain Relationships and Related Transactions,and Director IndependencePart IIIHawaiian Electrics Principal Accounting Fees and ServicesPart IIISelected sections of Proxy Statement of HEI for the

62、2017 Annual Meeting of Shareholders to be filed-Part III This combined Form 10-K represents separate filings by Hawaiian Electric Industries,Inc.and Hawaiian Electric Company,Inc.Information contained herein relating to any individual registrant is filed by each registrant on its own behalf.Hawaiian

63、 Electric makes no representations as to any information not relating to it or its subsidiaries.iTABLE OF CONTENTS Page Glossary of TermsCautionary Note Regarding Forward-Looking Statements PART I Item 1.BusinessItem 1A.Risk FactorsItem 1B.Unresolved Staff CommentsItem 2.PropertiesItem 3.Legal Proce

64、edingsItem 4.Mine Safety DisclosuresExecutive Officers of the Registrant(HEI)PART II Item 5.Market for Registrants Common Equity,Related Stockholder Matters and Issuer Purchases of Equity SecuritiesItem 6.Selected Financial DataItem 7.Managements Discussion and Analysis of Financial Condition and Re

65、sults of OperationsItem 7A.Quantitative and Qualitative Disclosures about Market RiskItem 8.Financial Statements and Supplementary DataItem 9.Changes in and Disagreements with Accountants on Accounting and Financial DisclosureItem 9A.Controls and ProceduresItem 9B.Other Information PART III Item 10.

66、Directors,Executive Officers and Corporate GovernanceItem 11.Executive CompensationItem 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersItem 13.Certain Relationships and Related Transactions,and Director IndependenceItem 14.Principal Accounting Fees a

67、nd Services PART IV Item 15.Exhibits and Financial Statement SchedulesSignatures iivi12535363636373739417982180180181181182183184184184190iiGLOSSARY OF TERMSDefined below are certain terms used in this report:TermsDefinitionsABOAccumulated benefit obligationAES HawaiiAES Hawaii,Inc.AFUDCAllowance fo

68、r funds used during constructionAOCIAccumulated other comprehensive income(loss)AOSAdequacy of supplyAPBOAccumulated postretirement benefit obligationAROAsset retirement obligationsASBAmerican Savings Bank,F.S.B.,a wholly-owned subsidiary of ASB Hawaii Inc.ASB HawaiiASB Hawaii,Inc.(formerly American

69、 Savings Holdings,Inc.),a wholly-owned subsidiary of HawaiianElectric Industries,Inc.and the parent company of American Savings Bank,F.S.B.ASCAccounting Standards CodificationASUAccounting Standards UpdateBtuBritish thermal unitCAAClean Air ActCERCLAComprehensive Environmental Response,Compensation

70、and Liability ActChevronChevron Products Company,which assigned their fuel oil supply contracts with the Utilities to IslandEnergy Services,LLC.CIPCampbell Industrial ParkCISCustomer Information SystemCompanyWhen used in Hawaiian Electric Industries,Inc.sections and in the Notes to Consolidated Fina

71、ncial Statements,“Company”refers to Hawaiian Electric Industries,Inc.and its direct and indirect subsidiaries,including,without limitation,Hawaiian Electric Company,Inc.and its subsidiaries(listed under Hawaiian Electric);ASB Hawaii,Inc.and its subsidiary,American Savings Bank,F.S.B.;HEI Properties,

72、Inc.(dissolved in 2015);Hawaiian Electric Industries Capital Trust II and Hawaiian Electric Industries Capital Trust III(inactive financing entities-dissolved and terminated in 2015);and The Old Oahu Tug Service,Inc.(formerly Hawaiian Tug&Barge Corp.).When used in Hawaiian Electric Company,Inc.secti

73、ons,“Company”refers to Hawaiian Electric Company,Inc.and its direct subsidiaries.Consolidated FinancialStatementsHEIs and Hawaiian Electrics combined Consolidated Financial Statements,including notes,in Item 8 ofthis Form 10-KConsumer AdvocateDivision of Consumer Advocacy,Department of Commerce and

74、Consumer Affairs of the State of HawaiiCT-1Combustion turbine No.1D&ODecision and order from the PUCDBEDTState of Hawaii Department of Business Economic Development and TourismDBFState of Hawaii Department of Budget and FinanceDGDistributed generationDodd-Frank ActDodd-Frank Wall Street Reform and C

75、onsumer Protection Act of 2010DOHDepartment of Health of the State of HawaiiDRIPHEI Dividend Reinvestment and Stock Purchase PlanDSMDemand-side managementECACEnergy cost adjustment clauseEEPSEnergy Efficiency Portfolio StandardsEGUElectrical generating unitEIP2010 Executive Incentive Plan,as amended

76、EPAEnvironmental Protection Agency-federalEPSEarnings per shareERISAEmployee Retirement Income Security Act of 1974,as amendedERLEnvironmental Response Law of the State of HawaiiExchange ActSecurities Exchange Act of 1934FASBFinancial Accounting Standards BoardFDICFederal Deposit Insurance Corporati

77、onFDICIAFederal Deposit Insurance Corporation Improvement Act of 1991GLOSSARY OF TERMS(continued)iiiTermsDefinitionsfederalU.S.GovernmentFERCFederal Energy Regulatory CommissionFHLBFederal Home Loan BankFHLMCFederal Home Loan Mortgage CorporationFICOFinancing CorporationFitchFitch Ratings,Inc.FNMAFe

78、deral National Mortgage AssociationFRBFederal Reserve BoardGAAPAccounting principles generally accepted in the United States of AmericaGHGGreenhouse gasGNMAGovernment National Mortgage AssociationGramm ActGramm-Leach-Bliley Act of 1999HC&SHawaiian Commercial&Sugar Company,a division of A&B-Hawaii,In

79、c.Hawaii Electric LightHawaii Electric Light Company,Inc.,an electric utility subsidiary of Hawaiian Electric Company,Inc.Hawaiian ElectricHawaiian Electric Company,Inc.,an electric utility subsidiary of Hawaiian Electric Industries,Inc.andparent company of Hawaii Electric Light Company,Inc.,Maui El

80、ectric Company,Limited,HECOCapital Trust III(unconsolidated financing subsidiary),Renewable Hawaii,Inc.and UluwehiokamaBiofuels Corp.Hawaiian Electrics MD&AHawaiian Electric Company,Inc.s Managements Discussion and Analysis of Financial Condition andResults of Operations in Item 7 of this Form 10-KH

81、EIHawaiian Electric Industries,Inc.,direct parent company of Hawaiian Electric Company,Inc.,ASBHawaii,Inc.,HEI Properties,Inc.(dissolved in 2015),Hawaiian Electric Industries Capital Trust II(dissolved and terminated in 2015),Hawaiian Electric Industries Capital Trust III(dissolved andterminated in

82、2015)and The Old Oahu Tug Service,Inc.(formerly Hawaiian Tug&Barge Corp.).HEIs 2017 Proxy StatementSelected sections of Proxy Statement for the 2017 Annual Meeting of Shareholders of Hawaiian ElectricIndustries,Inc.to be filed after the date of this Form 10-K,which are incorporated in this Form 10-K

83、by referenceHEIs MD&AHawaiian Electric Industries,Inc.s Managements Discussion and Analysis of Financial Condition andResults of Operations in Item 7 of this Form 10-KHEIPIHEI Properties,Inc.(dissolved in 2015),a wholly-owned subsidiary of Hawaiian Electric Industries,Inc.HEIRSPHawaiian Electric Ind

84、ustries Retirement Savings PlanHEPHamakua Energy Partners,L.P.,successor in interest to Encogen Hawaii,L.P.HTBHawaiian Tug&Barge Corp.On November 10,1999,HTB sold substantially all of its operating assetsand the stock of its subsidiary,Young Brothers,Limited,and changed its name to The Old Oahu TugS

85、ervices,Inc.HPOWERCity and County of Honolulu with respect to a power purchase agreement for a refuse-fired plantIPPIndependent power producerIRPIntegrated resource planIRRInterest rate riskIsland EnergyIsland Energy Services,LLC(a fuel oil supplier and subsidiary of One Rock Capital Partners,L.P.),

86、whopurchased Chevrons Hawaii assets on November 1,2016 and was assigned Chevrons fuel oil supplycontracts with the Utilities.KalaeloaKalaeloa Partners,L.P.kVKilovoltkWKilowatt/s(as applicable)KWHKilowatthour/s(as applicable)LNGLiquefied natural gasLSFOLow sulfur fuel oilLTIPLong-term incentive planM

87、ATSMercury and Air Toxics StandardsMaui ElectricMaui Electric Company,Limited,an electric utility subsidiary of Hawaiian Electric Company,Inc.MBtuMillion British thermal unitMD&AManagements Discussion and Analysis of Financial Condition and Results of OperationsMergerAs provided in the Merger Agreem

88、ent(see below),merger of NEE Acquisition Sub II,Inc.with and intoHEI,with HEI surviving,and then merger of HEI with and into NEE Acquisition Sub I,LLC,with NEEAcquisition Sub I,LLC surviving as a wholly owned subsidiary of NextEra Energy,Inc.GLOSSARY OF TERMS(continued)ivTermsDefinitionsMerger Agree

89、mentAgreement and Plan of Merger by and among HEI,NextEra Energy,Inc.,NEE Acquisition Sub II,Inc.and NEE Acquisition Sub I,LLC,dated December 3,2014 and terminated July 16,2016MoodysMoodys Investors ServicesMSFOMedium sulfur fuel oilMOUMemorandum of UnderstandingMWMegawatt/s(as applicable)MWhMegawat

90、thour/s(as applicable)NANot applicableNAAQSNational Ambient Air Quality StandardNEENextEra Energy,Inc.NEMNet energy meteringNIINet interest incomeNMNot meaningfulNPBCNet periodic benefits costsNQSONonqualified stock optionsO&MOther operation and maintenanceOCCOffice of the Comptroller of the Currenc

91、yOPEBPostretirement benefits other than pensionsOTSOffice of Thrift Supervision,Department of TreasuryOTTIOther-than-temporary impairmentPBOProjected benefit obligationPCBPolychlorinated biphenylsPGVPuna Geothermal VenturePPAPower purchase agreementPPACPurchased power adjustment clausePSDPrevention

92、of Significant DeteriorationPSIPsPower Supply Improvement PlansPUCPublic Utilities Commission of the State of HawaiiPURPAPublic Utility Regulatory Policies Act of 1978QFQualifying Facility under the Public Utility Regulatory Policies Act of 1978QTLQualified Thrift LenderRAMRate adjustment mechanismR

93、BARevenue balancing accountRegistrantEach of Hawaiian Electric Industries,Inc.and Hawaiian Electric Company,Inc.REIPRenewable Energy Infrastructure ProgramRFPRequest for proposalsRHIRenewable Hawaii,Inc.,a wholly-owned nonregulated subsidiary of Hawaiian Electric Company,Inc.ROAReturn on assetsROACE

94、Return on average common equityRORBReturn on rate baseRPSRenewable portfolio standardsS&PStandard&PoorsSARStock appreciation rightSECSecurities and Exchange CommissionSeeMeans the referenced material is incorporated by reference(or means refer to the referenced section inthis document or the referen

95、ced exhibit or other document)SLHCsSavings&Loan Holding CompaniesSOIP1987 Stock Option and Incentive Plan,as amended.Shares of HEI common stock reserved for issuanceunder the SOIP were deregistered and delisted in 2015.Spin-OffThe previously planned distribution to HEI shareholders of all of the com

96、mon stock of ASB Hawaiiimmediately prior to the Merger,which was terminatedSPRBsSpecial Purpose Revenue BondsSTSteam turbinestateState of HawaiiGLOSSARY OF TERMS(continued)vTermsDefinitionsTDRTroubled debt restructuringTesoroTesoro Hawaii Corporation dba BHP Petroleum Americas Refining Inc.,a fuel o

97、il supplierTOOTSThe Old Oahu Tug Service,Inc.,a wholly-owned subsidiary of Hawaiian Electric Industries,Inc.Trust IIIHECO Capital Trust IIIUBCUluwehiokama Biofuels Corp.,a wholly-owned nonregulated subsidiary of Hawaiian ElectricCompany,Inc.UtilitiesHawaiian Electric Company,Inc.,Hawaii Electric Lig

98、ht Company,Inc.and Maui Electric Company,LimitedVIEVariable interest entityviCautionary Note Regarding Forward-Looking StatementsThis report and other presentations made by Hawaiian Electric Industries,Inc.(HEI)and Hawaiian Electric Company,Inc.(Hawaiian Electric)and their subsidiaries contain“forwa

99、rd-looking statements,”which include statements that are predictive in nature,depend upon or refer to future events or conditions and usually include words such as“will,”“expects,”“anticipates,”“intends,”“plans,”“believes,”“predicts,”“estimates”or similar expressions.In addition,any statements conce

100、rning future financial performance,ongoing business strategies or prospects or possible future actions are also forward-looking statements.Forward-looking statements are based on current expectations and projections about future events and are subject to risks,uncertainties and the accuracy of assum

101、ptions concerning HEI and its subsidiaries(collectively,the Company),the performance of the industries in which they do business and economic and market factors,among other things.These forward-looking statements are not guarantees of future performance.Risks,uncertainties and other important factor

102、s that could cause actual results to differ materially from those described in forward-looking statements and from historical results include,but are not limited to,the following:international,national and local economic conditions,including the state of the Hawaii tourism,defense and construction i

103、ndustries,the strength or weakness of the Hawaii and continental U.S.real estate markets(including the fair value and/or the actual performance of collateral underlying loans held by ASB,which could result in higher loan loss provisions and write-offs),decisions concerning the extent of the presence

104、 of the federal government and military in Hawaii,the implications and potential impacts of U.S.and foreign capital and credit market conditions and federal,state and international responses to those conditions,and the potential impacts of global developments(including global economic conditions and

105、 uncertainties,the effects of the United Kingdoms referendum to withdraw from the European Union,unrest,the conflict in Syria,terrorist acts by ISIS or others,potential conflict or crisis with North Korea and potential pandemics);the effects of future actions or inaction of the U.S.government or rel

106、ated agencies,including those related to the U.S.debt ceiling,monetary policy and policy and regulation changes advanced or proposed by President Trump and his administration;weather and natural disasters(e.g.,hurricanes,earthquakes,tsunamis,lightning strikes,lava flows and the potential effects of

107、climate change,such as more severe storms and rising sea levels),including their impact on the Companys and Utilities operations and the economy;the timing and extent of changes in interest rates and the shape of the yield curve;the ability of the Company and the Utilities to access the credit and c

108、apital markets(e.g.,to obtain commercial paper and other short-term and long-term debt financing,including lines of credit,and,in the case of HEI,to issue common stock)under volatile and challenging market conditions,and the cost of such financings,if available;the risks inherent in changes in the v

109、alue of the Companys pension and other retirement plan assets and ASBs securities available for sale;changes in laws,regulations,market conditions and other factors that result in changes in assumptions used to calculate retirement benefits costs and funding requirements;the impact of the Dodd-Frank

110、 Wall Street Reform and Consumer Protection Act of 2010(Dodd-Frank Act)and of the rules and regulations that the Dodd-Frank Act requires to be promulgated;increasing competition in the banking industry(e.g.,increased price competition for deposits,or an outflow of deposits to alternative investments

111、,which may have an adverse impact on ASBs cost of funds);the impacts of the termination of the Merger with NextEra Energy,Inc.(NEE)and the resulting loss of NEEs resources,expertise and support(e.g.,financial and technological),including potentially higher costs and longer lead times to increase lev

112、els of renewable energy and to complete projects like Enterprise Resource Planning/Enterprise Asset Management(ERP/ERM)and smart grids,and a higher cost of capital;the potential delay by the Public Utilities Commission of the State of Hawaii(PUC)in considering(and potential disapproval of actual or

113、proposed)renewable energy proposals and related costs;reliance by the Utilities on outside parties such as the state,independent power producers(IPPs)and developers;and uncertainties surrounding technologies,solar power,wind power,proposed undersea cables,biofuels,environmental assessments required

114、to meet renewable portfolio standards(RPS)goals and the impacts of implementation of the renewable energy proposals on future costs of electricity;the ability of the Utilities to develop,implement and recover the costs of implementing the Utilities action plans and business model changes proposed an

115、d being developed in response to the four orders that the PUC issued in April 2014,in which the PUC:directed the Utilities to develop,among other things,Power Supply Improvement Plans,a Demand Response Portfolio Plan and a Distributed Generation Interconnection Plan;described the PUCs inclinations o

116、n the future of Hawaiis electric utilities and the vision,business strategies and regulatory policy changes required to align the Utilities business model with customer interests and the states public policy goals;and emphasized the need to“leap ahead”of other states in creating a 21st century gener

117、ation system and modern transmission and distribution grids;capacity and supply constraints or difficulties,especially if generating units(utility-owned or IPP-owned)fail or measures such as demand-side management(DSM),distributed generation(DG),combined heat and power or other firm capacity supply-

118、side resources fall short of achieving their forecasted benefits or are otherwise insufficient to reduce or meet peak demand;fuel oil price changes,delivery of adequate fuel by suppliers and the continued availability to the electric utilities of their energy cost adjustment clauses(ECACs);the conti

119、nued availability to the electric utilities or modifications of other cost recovery mechanisms,including the purchased power adjustment clauses(PPACs),rate adjustment mechanisms(RAMs)and pension and postretirement benefits other than pensions(OPEB)tracking mechanisms,and the continued decoupling of

120、revenues from sales to mitigate the effects of declining kilowatthour sales;vii the impact of fuel price volatility on customer satisfaction and political and regulatory support for the Utilities;the risks associated with increasing reliance on renewable energy,including the availability and cost of

121、 non-fossil fuel supplies for renewable energy generation and the operational impacts of adding intermittent sources of renewable energy to the electric grid;the growing risk that energy production from renewable generating resources may be curtailed and the interconnection of additional resources w

122、ill be constrained as more generating resources are added to the Utilities electric systems and as customers reduce their energy usage;the ability of IPPs to deliver the firm capacity anticipated in their power purchase agreements(PPAs);the potential that,as IPP contracts near the end of their terms

123、,there may be less economic incentive for the IPPs to make investments in their units to ensure the availability of their units;the ability of the Utilities to negotiate,periodically,favorable agreements for significant resources such as fuel supply contracts and collective bargaining agreements;new

124、 technological developments that could affect the operations and prospects of the Utilities and ASB or their competitors;new technological developments,such as the commercial development of energy storage and microgrids,that could affect the operations of the Utilities;cyber security risks and the p

125、otential for cyber incidents,including potential incidents at HEI,ASB and the Utilities(including at ASB branches and electric utility plants)and incidents at data processing centers they use,to the extent not prevented by intrusion detection and prevention systems,anti-virus software,firewalls and

126、other general information technology controls;federal,state,county and international governmental and regulatory actions,such as existing,new and changes in laws,rules and regulations applicable to HEI,the Utilities and ASB(including changes in taxation,increases in capital requirements,regulatory p

127、olicy changes,environmental laws and regulations(including resulting compliance costs and risks of fines and penalties and/or liabilities),the regulation of greenhouse gas(GHG)emissions,governmental fees and assessments(such as Federal Deposit Insurance Corporation assessments),and potential carbon“

128、cap and trade”legislation that may fundamentally alter costs to produce electricity and accelerate the move to renewable generation);developments in laws,regulations and policies governing protections for historic,archaeological and cultural sites,and plant and animal species and habitats,as well as

129、 developments in the implementation and enforcement of such laws,regulations and policies;discovery of conditions that may be attributable to historical chemical releases,including any necessary investigation and remediation,and any associated enforcement,litigation or regulatory oversight;decisions

130、 by the PUC in rate cases and other proceedings(including the risks of delays in the timing of decisions,adverse changes in final decisions from interim decisions and the disallowance of project costs as a result of adverse regulatory audit reports or otherwise);decisions by the PUC and by other age

131、ncies and courts on land use,environmental and other permitting issues(such as required corrective actions,restrictions and penalties that may arise,such as with respect to environmental conditions or RPS);potential enforcement actions by the Office of the Comptroller of the Currency(OCC),the Federa

132、l Reserve Board(FRB),the Federal Deposit Insurance Corporation(FDIC)and/or other governmental authorities(such as consent orders,required corrective actions,restrictions and penalties that may arise,for example,with respect to compliance deficiencies under existing or new banking and consumer protec

133、tion laws and regulations or with respect to capital adequacy);the ability of the Utilities to recover increasing costs and earn a reasonable return on capital investments not covered by RAMs;the risks associated with the geographic concentration of HEIs businesses and ASBs loans,ASBs concentration

134、in a single product type(i.e.,first mortgages)and ASBs significant credit relationships(i.e.,concentrations of large loans and/or credit lines with certain customers);changes in accounting principles applicable to HEI,the Utilities and ASB,including the adoption of new U.S.accounting standards,the p

135、otential discontinuance of regulatory accounting and the effects of potentially required consolidation of variable interest entities(VIEs)or required capital lease accounting for PPAs with IPPs;changes by securities rating agencies in their ratings of the securities of HEI and Hawaiian Electric and

136、the results of financing efforts;faster than expected loan prepayments that can cause an acceleration of the amortization of premiums on loans and investments and the impairment of mortgage-servicing assets of ASB;changes in ASBs loan portfolio credit profile and asset quality which may increase or

137、decrease the required level of provision for loan losses,allowance for loan losses and charge-offs;changes in ASBs deposit cost or mix which may have an adverse impact on ASBs cost of funds;the final outcome of tax positions taken by HEI,the Utilities and ASB;the risks of suffering losses and incurr

138、ing liabilities that are uninsured(e.g.,damages to the Utilities transmission and distribution system and losses from business interruption)or underinsured(e.g.,losses not covered as a result of insurance deductibles or other exclusions or exceeding policy limits);and other risks or uncertainties de

139、scribed elsewhere in this report(e.g.,Item 1A.Risk Factors)and in other reports previously and subsequently filed by HEI and/or Hawaiian Electric with the Securities and Exchange Commission(SEC).Forward-looking statements speak only as of the date of the report,presentation or filing in which they a

140、re made.Except to the extent required by the federal securities laws,HEI,Hawaiian Electric,ASB and their subsidiaries undertake no obligation to publicly update or revise any forward-looking statements,whether written or oral and whether as a result of new information,future events or otherwise.1PAR

141、T IITEM 1.BUSINESSHEI ConsolidatedHEI and subsidiaries and lines of business.HEI was incorporated in 1981 under the laws of the State of Hawaii and is a holding company with its principal subsidiaries engaged in electric utility and banking businesses operating primarily in the State of Hawaii.HEIs

142、predecessor,Hawaiian Electric,was incorporated under the laws of the Kingdom of Hawaii(now the State of Hawaii)on October 13,1891.As a result of a 1983 corporate reorganization,Hawaiian Electric became an HEI subsidiary and common shareholders of Hawaiian Electric became common shareholders of HEI.H

143、awaiian Electric and its operating utility subsidiaries,Hawaii Electric Light Company,Inc.(Hawaii Electric Light)and Maui Electric Company,Limited(Maui Electric),are regulated electric public utilities.Hawaiian Electric also owns all the common securities of HECO Capital Trust III(a Delaware statuto

144、ry trust),which was formed to effect the issuance of$50 million of cumulative quarterly income preferred securities in 2004,for the benefit of Hawaiian Electric,Hawaii Electric Light and Maui Electric.In December 2002,Hawaiian Electric formed a subsidiary,Renewable Hawaii,Inc.,to invest in renewable

145、 energy projects,but it has made no investments and currently is inactive.In September 2007,Hawaiian Electric formed another subsidiary,Uluwehiokama Biofuels Corp.(UBC),to invest in a biodiesel refining plant to be built on the island of Maui,which project has been terminated.Besides Hawaiian Electr

146、ic and its subsidiaries,HEI also currently owns directly or indirectly the following subsidiaries:ASB Hawaii,Inc.(ASB Hawaii)(a holding company,formerly known as American Savings Holdings,Inc.)and its subsidiary,American Savings Bank,F.S.B.(ASB);HEI Properties,Inc.(HEIPI),which was dissolved on Dece

147、mber 11,2015;Hawaiian Electric Industries Capital Trusts II and III(both formed in 1997 to be available for trust securities financings,but both were dissolved and terminated on December 14,2015);and The Old Oahu Tug Service,Inc.(TOOTS).ASB,acquired by HEI in 1988,is one of the largest financial ins

148、titutions in the State of Hawaii with assets of$6.4 billion as of December 31,2016.HEIPI,whose predecessor company was formed in February 1998,held venture capital investments.HEIPI was dissolved on December 11,2015.TOOTS administers certain employee and retiree-related benefit programs and monitors

149、 matters related to its predecessors former maritime freight transportation operations.Termination of proposed Merger.For information concerning the termination of HEIs Merger Agreement with NextEra Energy,Inc.,see Note 2 of the Consolidated Financial Statements.Additional information.The Companys w

150、ebsite address is .The information on the Companys website is not incorporated by reference in this annual report on Form 10-K unless,and except to the extent,specifically incorporated herein by reference.HEI and Hawaiian Electric currently make available free of charge through this website their an

151、nual reports on Form 10-K,quarterly reports on Form 10-Q,current reports on Form 8-K and all amendments to those reports(since 1994)as soon as reasonably practicable after such material is electronically filed with,or furnished to,the SEC.HEI and Hawaiian Electric intend to continue to use HEIs webs

152、ite as a means of disclosing additional information.Such disclosures will be included on HEIs website in the Investor Relations section.Accordingly,investors should routinely monitor such portions of HEIs website,in addition to following HEIs,Hawaiian Electrics and ASBs press releases,SEC filings an

153、d public conference calls and webcasts.Investors may also wish to refer to the PUC website at dms.puc.hawaii.gov/dms in order to review documents filed with and issued by the PUC.No information at the PUC website is incorporated herein by reference.Commitments and contingencies.See“HEI ConsolidatedL

154、iquidity and capital resources Selected contractual obligations and commitments”in HEIs MD&A,Hawaiian Electrics“Commitments and contingencies”below and Note 5 of the Consolidated Financial Statements.Regulation.HEI and Hawaiian Electric are each holding companies within the meaning of the Public Uti

155、lity Holding Company Act of 2005 and implementing regulations,which requires holding companies and their subsidiaries to grant the Federal Energy Regulatory Commission(FERC)access to books and records relating to FERCs jurisdictional rates.FERC granted HEI and Hawaiian Electric a waiver from its rec

156、ord retention,accounting and reporting requirements,effective May 2006.HEI is subject to an agreement entered into with the PUC(the PUC Agreement)which,among other things,requires PUC approval of any change in control of HEI.The PUC Agreement also requires HEI to provide the PUC with periodic financ

157、ial 2information and other reports concerning intercompany transactions and other matters.It also prohibits the electric utilities from loaning funds to HEI or its nonutility subsidiaries and from redeeming common stock of the electric utility subsidiaries without PUC approval.Further,the PUC could

158、limit the ability of the electric utility subsidiaries to pay dividends on their common stock.See“Restrictions on dividends and other distributions”and“Electric utilityRegulation”below.HEI and ASB Hawaii are subject to Federal Reserve Board(FRB)registration,supervision and reporting requirements as

159、savings and loan holding companies.As a result of the enactment of the Dodd-Frank Act,supervision and regulation of HEI and ASB Hawaii,as thrift holding companies,moved to the FRB,and supervision and regulation of ASB,as a federally chartered savings bank,moved to the Office of the Comptroller of th

160、e Currency(OCC)in July 2011.In the event the OCC has reasonable cause to believe that any activity of HEI or ASB Hawaii constitutes a serious risk to the financial safety,soundness or stability of ASB,the OCC is authorized to impose certain restrictions on HEI,ASB Hawaii and/or any of their subsidia

161、ries.Possible restrictions include precluding or limiting:(i)the payment of dividends by ASB;(ii)transactions between ASB,HEI or ASB Hawaii,and their subsidiaries or affiliates;and(iii)any activities of ASB that might expose ASB to the liabilities of HEI and/or ASB Hawaii and their other affiliates.

162、See“Restrictions on dividends and other distributions”below.Bank regulations generally prohibit savings and loan holding companies and their nonthrift subsidiaries from engaging in activities other than those which are specifically enumerated in the regulations.However,the unitary savings and loan h

163、olding company relationship among HEI,ASB Hawaii and ASB is“grandfathered”under the Gramm-Leach-Bliley Act of 1999(Gramm Act)so that HEI and its subsidiaries are able to continue to engage in their current activities so long as ASB satisfies the qualified thrift lender(QTL)test discussed under“BankR

164、egulationQualified thrift lender test.”ASB met the QTL test at all times during 2016;however,the failure of ASB to satisfy the QTL test in the future could result in a need for HEI to divest ASB.HEI is also affected by provisions of the Dodd-Frank Act relating to corporate governance and executive c

165、ompensation,including provisions requiring shareholder“say on pay”and“say on pay frequency”votes,mandating additional disclosures concerning executive compensation and compensation consultants and advisors and further restricting proxy voting by brokers in the absence of instructions.See“BankLegisla

166、tion and regulation”in HEIs MD&A for a discussion of effects of the Dodd-Frank Act on HEI and ASB.Restrictions on dividends and other distributions.HEI is a legal entity separate and distinct from its various subsidiaries.As a holding company with no significant operations of its own,HEIs principal

167、sources of funds are dividends or other distributions from its operating subsidiaries,borrowings and sales of equity.The rights of HEI and,consequently,its creditors and shareholders,to participate in any distribution of the assets of any of its subsidiaries are subject to the prior claims of the cr

168、editors and preferred shareholders of such subsidiary,except to the extent that claims of HEI in its capacity as a creditor are recognized as primary.The abilities of certain of HEIs subsidiaries to pay dividends or make other distributions to HEI are subject to contractual and regulatory restrictio

169、ns.Under the PUC Agreement,in the event that the consolidated common stock equity of the electric utility subsidiaries falls below 35%of the total capitalization of the electric utilities(including the current maturities of long-term debt,but excluding short-term borrowings),the electric utility sub

170、sidiaries would,absent PUC approval,be restricted in their payment of cash dividends to 80%of the earnings available for the payment of dividends in the current fiscal year and preceding five years,less the amount of dividends paid during that period.The PUC Agreement also provides that the foregoin

171、g dividend restriction shall not be construed as relinquishing any right the PUC may have to review the dividend policies of the electric utility subsidiaries.As of December 31,2016,the consolidated common stock equity of HEIs electric utility subsidiaries was 57%of their total capitalization(as cal

172、culated for purposes of the PUC Agreement).As of December 31,2016,Hawaiian Electric and its subsidiaries had common stock equity of$1.8 billion of which approximately$729 million was not available for transfer to HEI without regulatory approval.The ability of ASB to make capital distributions to HEI

173、 and other affiliates is restricted under federal law.Subject to a limited exception for stock redemptions that do not result in any decrease in ASBs capital and would improve ASBs financial condition,ASB is prohibited from declaring any dividends,making any other capital distributions,or paying a m

174、anagement fee to a controlling person if,following the distribution or payment,ASB would be deemed to be undercapitalized,significantly undercapitalized or critically undercapitalized.See“BankRegulationPrompt corrective action.”All dividends are subject to review by the OCC and FRB and receipt of a

175、letter from the FRB communicating the agencies non-objection to the payment of any dividend ASB proposes to declare and pay to ASB Hawaii and HEI.Also see Note 14 to the Consolidated Financial Statements.HEI and its subsidiaries are also subject to debt covenants,preferred stock resolutions and the

176、terms of guarantees that could limit their respective abilities to pay dividends.The Company does not expect that the regulatory and contractual 3restrictions applicable to HEI and/or its subsidiaries will significantly affect the operations of HEI or its ability to pay dividends on its common stock

177、.Environmental regulation.HEI and its subsidiaries are subject to federal and state statutes and governmental regulations pertaining to water quality,air quality and other environmental factors.See the“Environmental regulation”discussions in the“Electric utility”and“Bank”sections below.Securities ra

178、tings.See the Fitch Ratings,Inc.(Fitch),Moodys Investors Services(Moodys)and Standard&Poors(S&P)ratings of HEIs and Hawaiian Electrics securities and discussion under“Liquidity and capital resources”(both“HEI Consolidated”and“Electric utility”)in HEIs MD&A.These ratings reflect only the view,at the

179、time the ratings are issued,of the applicable rating agency from whom an explanation of the significance of such ratings may be obtained.There is no assurance that any such credit rating will remain in effect for any given period of time or that such rating will not be lowered,suspended or withdrawn

180、 entirely by the applicable rating agency if,in such rating agencys judgment,circumstances so warrant.Any such lowering,suspension or withdrawal of any rating may have an adverse effect on the market price or marketability of HEIs and/or Hawaiian Electrics securities,which could increase the cost of

181、 capital of HEI and Hawaiian Electric,and could affect costs,including interest charges,under HEIs and/or Hawaiian Electrics debt securities and credit facilities.Neither HEI nor Hawaiian Electric management can predict future rating agency actions or their effects on the future cost of capital of H

182、EI or Hawaiian Electric.Revenue bonds have been issued by the Department of Budget and Finance of the State of Hawaii for the benefit of Hawaiian Electric and its subsidiaries,but the source of their repayment are the unsecured obligations of Hawaiian Electric and its subsidiaries under loan agreeme

183、nts and notes issued to the Department,including Hawaiian Electrics guarantees of its subsidiaries obligations.The payment of principal and interest due on revenue bonds currently outstanding and issued prior to 2009 are insured,but the ratings of these insurers have been withdrawnsee“Electric Utili

184、tyLiquidity and capital resources”in HEIs MD&A.Employees.The Company had full-time employees as follows:December 3120162015201420132012HEI4139444342Hawaiian Electric and its subsidiaries2,6622,7272,7592,7642,658ASB and its subsidiaries1,0931,1521,1621,1591,1703,7963,9183,9653,9663,870The employees o

185、f HEI and its direct and indirect subsidiaries,other than the electric utilities,are not covered by any collective bargaining agreement.The International Brotherhood of Electrical Workers Local 1260 represents roughly half of the Utilities workforce covered by a collective bargaining agreement that

186、expires on October 31,2018.Properties.HEI leases office space from nonaffiliated lessors in downtown Honolulu under leases that expire in December 2017.See the discussions under“Electric Utility”and“Bank”below for a description of properties owned by HEI subsidiaries.Electric utilityHawaiian Electri

187、c and subsidiaries and service areas.Hawaiian Electric,Hawaii Electric Light and Maui Electric(Utilities)are regulated operating electric public utilities engaged in the production,purchase,transmission,distribution and sale of electricity on the islands of Oahu;Hawaii;and Maui,Lanai and Molokai,res

188、pectively.Hawaiian Electric acquired Maui Electric in 1968 and Hawaii Electric Light in 1970.In 2016,the electric utilities revenues and net income amounted to approximately 88%and 58%(impacted by merger termination fee and other impacts at corporate),respectively,of HEIs consolidated revenues and n

189、et income,compared to approximately 90%and 85%in 2015 and approximately 92%and 82%in 2014,respectively.The islands of Oahu,Hawaii,Maui,Lanai and Molokai have a combined population estimated at 1.4 million,or approximately 95%of the total population of the State of Hawaii,and comprise a service area

190、of 5,815 square miles.The principal communities served include Honolulu(on Oahu),Hilo and Kona(on Hawaii)and Wailuku and Kahului(on Maui).The service areas also include numerous suburban communities,resorts,U.S.Armed Forces installations and agricultural operations.The state has granted Hawaiian Ele

191、ctric,Hawaii Electric Light and Maui Electric nonexclusive franchises,which authorize the Utilities to construct,operate and maintain facilities over and under public streets and sidewalks.Each of these franchises will continue in effect for an indefinite period of time until forfeited,altered,amend

192、ed or repealed.4Sales of electricity.Years ended December 31201620152014(dollars in thousands)Customeraccounts*Electric salesrevenuesCustomeraccounts*Electric salesrevenuesCustomeraccounts*Electric salesrevenuesHawaiian Electric304,261$1,466,225302,958$1,636,245301,953$2,134,094Hawaii Electric Light

193、85,029309,52184,309343,84383,421420,647Maui Electric70,872306,76770,533343,72270,042420,734 460,162$2,082,513457,800$2,323,810455,416$2,975,475*As of December 31.Seasonality.Kilowatthour(KWH)sales of the Utilities follow a seasonal pattern,but they do not experience extreme seasonal variations due t

194、o extreme weather variations experienced by some electric utilities on the U.S.mainland.KWH sales in Hawaii tend to increase in the warmer,more humid months as a result of increased demand for air conditioning.Significant customers.The Utilities derived approximately 11%,11%and 12%of their operating

195、 revenues in 2016,2015 and 2014 respectively,from the sale of electricity to various federal government agencies.Under the Energy Policy Act of 2005,the Energy Independence and Security Act of 2007 and/or executive orders:(1)federal agencies must establish energy conservation goals for federally fun

196、ded programs,(2)goals were set to reduce federal agencies energy consumption by 3%per year up to 30%by fiscal year 2015 relative to fiscal year 2003,and(3)renewable energy goals were established for electricity consumed by federal agencies.Hawaiian Electric continues to work with various federal age

197、ncies to implement measures that will help them achieve their energy reduction and renewable energy objectives.State of Hawaii and U.S.Department of Energy MOU.On September 15,2014,the State of Hawaii and the U.S.Department of Energy executed a Memorandum of Understanding(MOU)recognizing that Hawaii

198、 is embarking on the next phase of its clean energy future.The MOU provides the framework for a comprehensive,sustained effort to better realize its vast renewable energy potential and allow Hawaii to push forward in three main areas:the power sector,transportation and energy efficiency.This next ph

199、ase will focus on stimulating deployment of clean energy infrastructure as a catalyst for economic growth,energy system innovation and test bed investments.The PUC issued a decision and order(D&O)on January 3,2012 approving a framework for Energy Efficiency Portfolio Standards(EEPS)that set 2008 as

200、the initial base year for evaluation and linearly allocated the 2030 goal to interim incremental reduction goals of 1,375 GWH by 2015 and 975 GWH by each of the years 2020,2025 and 2030.These goals may be revised through goal evaluations scheduled every five years or as the result of recommendations

201、 by an EEPS technical working group(TWG)for consideration by the PUC.The interim and final reduction goals will be allocated among contributing entities by the EEPS TWG.The PUC may establish penalties in the future for failure to meet the goals.Another of the initiatives under the Energy Agreement w

202、as advanced when the PUC approved the implementation of revenue decoupling for the Utilities under which they are allowed to recover PUC-approved revenue requirements that are not based on the amount of electricity sold.Both the EEPS and the implementation of revenue decoupling could have an impact

203、on sales.The statewide Energy Efficiency Potential Study issued in December 2013 indicated that Hawaii was on track to meet the 2015 interim EEPS target,and that available untapped energy efficiency resources in Hawaii exceed the EEPS goal of 4,300 GWH.However,no changes have been made to the goals

204、or Framework that govern the achievement of EEPS.The Division of Consumer Advocacys 2016 Compliance Resolution Fund Report states that it appears Hawaii is progressing towards meeting its 2020 goals.Neither HEI nor Hawaiian Electric management can predict with certainty the impact of these or other

205、governmental mandates or the September 2014 MOU on HEIs or Hawaiian Electrics future results of operations,financial condition or liquidity.5Selected consolidated electric utility operating statistics.Years ended December 3120162015201420132012KWH sales(millions)Residential2,332.72,396.52,379.72,450

206、.92,582.0Commercial2,911.52,977.83,022.03,105.93,074.4Large light and power3,555.13,532.93,524.53,462.73,499.8Other46.049.350.050.049.8 8,845.38,956.58,976.29,069.59,206.0KWH net generated and purchased(millions)Net generated4,940.45,124.55,131.35,352.05,601.7Purchased4,349.14,308.34,306.74,195.24,0

207、93.2 9,289.59,432.89,438.09,547.29,694.9Losses and system uses(%)4.64.84.74.84.8Energy supply(December 31)Net generating capabilityMW1,6691,6691,7871,7871,787Firm and other purchased capabilityMW551555575567545 2,2202,2242,3622,3542,332Net peak demandMW11,5931,6101,5541,5351,535Btu per net KWH gener

208、ated10,71010,63210,61310,57010,533Average fuel oil cost per Mbtu(cents)862.31,206.52,087.62,103.22,210.4Customer accounts(December 31)Residential402,818400,655398,256394,910392,025Commercial55,08954,87854,92454,61654,005Large light and power670659596556577Other1,5851,6081,6401,6601,636 460,162457,80

209、0455,416451,742448,243Electric revenues(thousands)Residential$638,776$709,886$879,605$892,438$952,159Commercial711,553798,2021,027,5881,044,1661,060,983Large light and power720,878802,3661,051,1191,015,0791,062,226Other11,30613,35617,16317,00817,392$2,082,513$2,323,810$2,975,475$2,968,691$3,092,760A

210、verage revenue per KWH sold(cents)23.5425.9033.1532.7333.60Residential27.3829.6236.9636.4136.88Commercial24.4426.8134.0033.6234.51Large light and power20.2822.7129.8229.3130.35Other24.6127.0534.3634.0234.93Residential statistics Average annual use per customer account(KWH)5,8065,9966,0006,2206,596Av

211、erage annual revenue per customer account$1,590$1,776$2,218$2,265$2,432Average number of customer accounts401,796399,674396,640394,024391,4371 Sum of the net peak demands on all islands served,noncoincident and nonintegrated.6Generation statistics.The following table contains certain generation stat

212、istics as of and for the year ended December 31,2016.The net generating and firm purchased capability available for operation at any given time may be more or less than shown because of capability restrictions or temporary outages for inspection,maintenance,repairs or unforeseen circumstances.Hawaii

213、anElectricHawaiiElectricLightMaui Electric Island of OahuIsland of HawaiiIsland of MauiIsland ofLanaiIsland ofMolokaiTotalNet generating and firm purchased capability(MW)as of December 31,20161Conventional oil-fired steam units999.549.435.91,084.8Diesel27.096.89.39.6142.7Combustion turbines(peaking

214、units)101.8101.8Other combustion turbines46.32.248.5Combined-cycle unit56.3113.6169.9Biodiesel121.0121.0Firm contract power2456.594.6551.11,678.8273.6246.39.311.82,219.8Net peak demand(MW)31,192.0188.5201.05.75.71,592.9Reserve margin40.2%45.1%23.2%63.2%107.0%40.8%Annual load factor66.7%69.4%63.5%62.

215、9%62.3%66.6%KWH net generated and purchased(millions)6,963.11,145.71,118.231.431.19,289.51 Hawaiian Electric units at normal ratings;Hawaii Electric Light and Maui Electric units at reserve ratings.2 Nonutility generators-Hawaiian Electric:208 MW(Kalaeloa Partners,L.P.,oil-fired),180 MW(AES Hawaii,I

216、nc.,coal-fired)and 68.5 MW(HPOWER,refuse-fired);Hawaii Electric Light:34.6 MW(Puna Geothermal venture,geothermal)and 60 MW(Hamakua Energy Partners,L.P.,oil-fired).3 Noncoincident and nonintegrated.Generating reliability and reserve margin.Hawaiian Electric serves the island of Oahu and Hawaii Electr

217、ic Light serves the island of Hawaii.Maui Electric has three separate electrical systemsone each on the islands of Maui,Molokai and Lanai.Hawaiian Electric,Hawaii Electric Light and Maui Electric have isolated electrical systems that are not currently interconnected to each other or to any other ele

218、ctrical grid and,thus,each maintains a higher level of reserve generation than is typically carried by interconnected mainland U.S.utilities,which are able to share reserve capacity.These higher levels of reserve margins are required to meet peak electric demands,to provide for scheduled maintenance

219、 of generating units(including the units operated by IPPs relied upon for firm capacity)and to allow for the forced outage of the largest generating unit in the system.See“Adequacy of supply”in HEIs MD&A under“Electric utility.”Nonutility generation.The Utilities have supported state and federal ene

220、rgy policies which encourage the development of renewable energy sources that reduce the use of fuel oil as well as the development of qualifying facilities.The Utilities renewable energy sources and potential sources range from wind,solar,photovoltaic,geothermal,wave and hydroelectric power to ener

221、gy produced by the burning of bagasse(sugarcane waste),municipal waste and other biofuels.The rate schedules of the electric utilities contain ECACs and PPACs that allow them to recover costs of fuel and purchase power expenses.The PUC approved the PPACs for the first time for Hawaiian Electric,Hawa

222、ii Electric Light and Maui Electric in March 2011,February 2012 and May 2012,respectively.In addition to the firm capacity PPAs described below,the electric utilities also purchase energy on an as-available basis directly from nonutility generators and through its Feed-In Tariff programs.The electri

223、c utilities also receive renewable energy from customers under its Net Energy Metering,and Customer Grid Supply programs.The PUC has allowed rate recovery for the firm capacity and purchased energy costs for the electric utilities approved firm capacity and as-available energy PPAs.7Hawaiian Electri

224、c firm capacity PPAs.Hawaiian Electric currently has three major PPAs that provide a total of 456.5 MW of firm capacity,representing 28%of Hawaiian Electrics total net generating and firm purchased capacity on Oahu as of December 31,2016.In March 1988,Hawaiian Electric entered into a PPA with AES Ba

225、rbers Point,Inc.(now known as AES Hawaii,Inc.(AES Hawaii),a Hawaii-based,indirect subsidiary of The AES Corporation.The agreement with AES Hawaii,as amended(through Amendment No.2),provides that,for a period of 30 years beginning September 1992,Hawaiian Electric will purchase 180 megawatts(MW)of fir

226、m capacity.The AES Hawaii coal-fired cogeneration plant utilizes a“clean coal”technology and is designed to sell sufficient steam to be a“Qualifying Facility”(QF)under the Public Utility Regulatory Policies Act of 1978(PURPA).See“Commitments and contingenciesPower purchase agreementsAES Hawaii,Inc.”

227、in Note 4 to the Consolidated Financial Statements for an update regarding this PPA.In October 1988,Hawaiian Electric entered into an agreement with Kalaeloa Partners,L.P.(Kalaeloa),a limited partnership,which,through affiliates,contracted to design,build,operate and maintain a QF.The agreement with

228、 Kalaeloa,as amended,provided that Hawaiian Electric would purchase 180 MW of firm capacity for a period of 25 years beginning in May 1991 and terminating in May 2016.The Kalaeloa facility is a combined-cycle operation,consisting of two oil-fired combustion turbines burning low sulfur fuel oil(LSFO)

229、and a steam turbine that utilizes waste heat from the combustion turbines.Following two additional amendments,effective in 2005,Kalaeloa currently supplies Hawaiian Electric with 208 MW of firm capacity.In January 2011,Hawaiian Electric initiated renegotiation of the agreement with Kalaeloa(exempt f

230、rom the PUCs Competitive Bidding Framework).The PPA,as amended,automatically extends on a month-to-month basis as long as the parties are still negotiating in good faith.On August 1,2016,the parties entered into an agreement that neither party will give written notice of termination of the PPA prior

231、 to October 31,2017.This agreement complements continued negotiations between the parties and accounts for time needed for PUC approval of a negotiated resolution.Hawaiian Electric also entered into a PPA in March 1986 and a firm capacity amendment in April 1991 with the City and County of Honolulu

232、with respect to a refuse-fired plant(HPOWER).Under the amended PPA,the HPOWER facility supplied Hawaiian Electric with 46 MW of firm capacity.In May 2012,Hawaiian Electric entered into an amended and restated PPA with the City and County of Honolulu to purchase additional firm capacity(including the

233、 then existing 46 MW)from the expanded HPOWER facility for a term of 20 years from the commercial operation date(April 2,2013).Under the amended and restated PPA,which the PUC approved,Hawaiian Electric purchases 68.5 MW of firm capacity.Hawaii Electric Light and Maui Electric firm capacity PPAs.As

234、of December 31,2016,Hawaii Electric Light has PPAs for 94.6 MW.Hawaii Electric Light has a 35-year PPA with Puna Geothermal Venture(PGV)for 30 MW of firm capacity from its geothermal steam facility,which will expire on December 31,2027.In February 2011,Hawaii Electric Light and PGV amended the PPA f

235、or the pricing on a portion of the energy payments and entered into a new PPA for Hawaii Electric Light to acquire an additional 8 MW of firm,dispatchable capacity.The PUC approved the amendment and the new PPA in December 2011.PGVs expansion became commercially operational in March 2012 for a total

236、 facility capacity of 34.6 MW.In October 1997,Hawaii Electric Light entered into an agreement with Encogen,which has been succeeded by Hamakua Energy Partners,L.P.(HEP).The agreement requires Hawaii Electric Light to purchase up to 60 MW(net)of firm capacity for a period of 30 years,expiring on Dece

237、mber 31,2030.The dual-train combined-cycle(DTCC)facility,which primarily burns naphtha(a mixture of liquid hydrocarbons),consists of two oil-fired combustion turbines and a steam turbine that utilizes waste heat from the combustion turbines.In December 2015,Hawaii Electric Light signed an agreement

238、to purchase the 60 MW HEP generating plant,subject to PUC approval.In February 2016,Hawaii Electric Light and Hawaiian Electric filed an application with the PUC requesting approval of Hawaii Electric Lights purchase of the HEP Facility,the parties proposed financing plan,the recovery of revenue req

239、uirements for the plant additions associated with the purchase through Hawaii Electric Lights Decoupling Rate Adjustment Mechanism above the RAM Cap,the inclusion of the costs under certain fuel contracts through Hawaii Electric Lights ECAC and termination of the existing PPA.A decision on the appli

240、cation requesting PUC approval is pending.Maui Electric had a PPA with HC&S for 16 MW of firm capacity.Subsequently,HC&S decreased firm capacity to 8 MW effective January 1,2015.In October 2015,following PUC approval,an amended PPA between Maui Electric and HC&S became effective,which changed the pr

241、icing structure and rates for energy sold to Maui Electric,eliminated the capacity payment to HC&S and Maui Electrics minimum purchase obligation,provided that Maui Electric may request up to 4 MW of scheduled energy during certain months and be provided up to 16 MW of emergency power and extended t

242、he term of the PPA from 2014 to 2017.The HC&S generating units primarily burn bagasse(sugar cane waste)along with secondary fuels of diesel oil or coal.In January 2016,HC&S announced it will discontinue the growing and harvesting of sugar cane,and provided Maui Electric with a notice of termination

243、of the amended PPA.Effective December 23,2016,Maui Electric and HC&S mutually terminated the PPA to coincide with the end of HC&S harvesting operations.8Fuel oil usage and supply.The rate schedules of the Utilities include ECACs under which electric rates(and consequently the revenues of the electri

244、c utility subsidiaries generally)are adjusted for changes in the weighted-average price paid for fuel oil and certain components of purchased power,and the relative amounts of company-generated power and purchased power.See discussion of rates and issues relating to the ECAC below under“Rates,”and“E

245、lectric utilityCertain factors that may affect future results and financial conditionRegulation of electric utility rates”and“Electric utilityMaterial estimates and critical accounting policiesRevenues”in HEIs MD&A.Hawaiian Electrics steam generating units consume low sulfur fuel oil(LSFO)and Hawaii

246、an Electrics combustion turbine peaking units consume diesel,except for Hawaiian Electrics Campbell Industrial Park generating facility which operates exclusively on B99 grade biodiesel.Hawaii Electric Lights and Maui Electrics steam generating units burn industrial fuel oil(IFO)and Hawaii Electric

247、Lights and Maui Electrics Maui combustion turbine generating units burn diesel.Hawaii Electric Lights and Maui Electrics Maui,Molokai,and Lanai diesel engine generating units burn ultra-low-sulfur diesel.All of the fuel purchased for the Utilities(except for fuel purchased for Lanai)is purchased und

248、er the new fuel supply contracts with Island Energy Services,LLC(previously with Chevron Products Company),which began on January 1,2017 and will terminate at the end of 2019.See the fuel oil commitments information set forth in the“Fuel contracts”section in Note 4 of the Consolidated Financial Stat

249、ements.The following table sets forth the average cost of fuel oil used by Hawaiian Electric,Hawaii Electric Light and Maui Electric to generate electricity in 2016,2015 and 2014:Hawaiian ElectricHawaii Electric LightMaui ElectricConsolidated$/Barrel/MBtu$/Barrel/MBtu$/Barrel/MBtu$/Barrel/MBtu201651

250、.30815.253.27876.962.211,048.653.49862.3201571.861,144.879.031,307.384.381,425.774.711,206.52014130.712,075.4121.492,002.5130.512,198.9129.652,087.6The average per-unit cost of fuel oil consumed to generate electricity for Hawaiian Electric,Hawaii Electric Light and Maui Electric reflects a differen

251、t volume mix of fuel types and grades as follows:Hawaiian ElectricHawaii Electric LightMaui Electric%LSFO%Biodiesel/Diesel%IFO%Diesel%MSFO%Diesel201697349511981201596443571684201497347532080In December 2000,Hawaii Electric Light and Maui Electric executed contracts of private carriage with Hawaiian

252、Interisland Towing,Inc.for the employment of a double-hull tank barge for the shipment of medium sulfur fuel oil(MSFO)and diesel supplies from their fuel suppliers facilities on Oahu to storage locations on the islands of Hawaii and Maui,respectively,commencing January 1,2002.The contracts have been

253、 extended through December 31,2021.In July 2011,the carriage contracts were assigned to Kirby Corporation(Kirby),which provides refined petroleum and other products for marine transportation,distribution and logistics services in the U.S.domestic marine transportation industry.Kirby never takes titl

254、e to the fuel oil or diesel fuel,but does have custody and control while the fuel is in transit from Oahu.If there were an oil spill in transit,Kirby is generally contractually obligated to indemnify Hawaii Electric Light and/or Maui Electric for resulting clean-up costs,fines and damages.Kirby main

255、tains liability insurance coverage for an amount in excess of$1 billion for oil spill related damage.State law provides a cap of$700 million on liability for releases of heavy fuel oil transported interisland by tank barge.In the event of a release,Hawaii Electric Light and/or Maui Electric may be r

256、esponsible for any clean-up,damages,and/or fines that Kirby and its insurance carrier do not cover.The prices that Hawaiian Electric,Hawaii Electric Light and Maui Electric pay for purchased energy from certain older nonutility generators are generally linked to the price of oil.The AES Hawaii energ

257、y prices vary primarily with an inflation index.The energy prices for Kalaeloa,which purchases LSFO from Par Hawaii Refining,LLC(PAR),vary primarily with the price of Asian crude oil.A portion of PGV energy prices are based on the electric utilities respective short-run avoided energy cost rates(whi

258、ch vary with their composite fuel costs),subject to minimum floor rates specified in their approved PPA.HEP energy prices vary primarily with Hawaii Electric Lights diesel costs.9The Utilities estimate that 65%of the net energy they generate or purchase will come from fossil fuel oil in 2017 compare

259、d to 67%in 2016.Hawaiian Electric generally maintains an average system fuel inventory level equivalent to 47 days of forward consumption.Hawaii Electric Light and Maui Electric generally maintain an average system fuel inventory level equivalent to approximately one months supply of both MSFO and d

260、iesel.The PPAs with AES Hawaii and HEP require that they maintain certain minimum fuel inventory levels.Rates.Hawaiian Electric,Hawaii Electric Light and Maui Electric are subject to the regulatory jurisdiction of the PUC with respect to rates,issuance of securities,accounting and certain other matt

261、ers.See“Regulation”below.General rate increases require the prior approval of the PUC after public and contested case hearings.Rates for Hawaiian Electric and its subsidiaries include ECACs and PPACs.Under current law and practices,specific and separate PUC approval is not required for each rate cha

262、nge pursuant to automatic rate adjustment clauses previously approved by the PUC.PURPA requires the PUC to periodically review the ECACs of electric and gas utilities in the state,and such clauses,as well as the rates charged by the utilities generally,are subject to change.PUC approval is also requ

263、ired for all surcharges and adjustments before they are reflected in rates.See“Electric utilityMost recent rate proceedings,“Electric utilityCertain factors that may affect future results and financial conditionRegulation of electric utility rates”and“Electric utilityMaterial estimates and critical

264、accounting policiesRevenues”in HEIs MD&A and“Interim increases”and“Utility projects”under“Commitments and contingencies”in Note 4 of the Consolidated Financial Statements.Public Utilities Commission and Division of Consumer Advocacy of the Department of Commerce and Consumer Affairs of the State of

265、Hawaii.Randall Y.Iwase is the Chair of the PUC(for a term that will expire in June 2020)and was formerly a state legislator,Honolulu city council member,supervising deputy attorney general,and Chair of the Hawaii State Tax Review Commission.The other commissioners are Lorraine H.Akiba(for a term tha

266、t will expire in June 2018),who previously was an attorney in private practice who earlier served as the Director of the State Department of Labor and Industrial Relations,and Thomas C.Gorak(appointed on an interim basis beginning July 2016),who was also an attorney in private practice before servin

267、g as the PUCs chief legal and regulatory advisor.The Division of Consumer Advocacy is led by its newly appointed Executive Director,Dean Nishina,who most recently served as the divisions Public Utilities Administrator.Competition.See“Electric utilityCertain factors that may affect future results and

268、 financial conditionCompetition”in HEIs MD&A.Electric and magnetic fields.The generation,transmission and use of electricity produces low-frequency(50Hz-60Hz)electrical and magnetic fields(EMF).While EMF has been classified as a possible human carcinogen by more than one public health organization a

269、nd remains the subject of ongoing studies and evaluations,no definite causal relationship between EMF and health risks has been clearly demonstrated to date and there are no federal standards in the U.S.limiting occupational or residential exposure to 50Hz-60Hz EMF.The Utilities are continuing to mo

270、nitor the ongoing research and continue to participate in utility industry funded studies on EMF and,where technically feasible and economically reasonable,continue to pursue a policy of prudent avoidance in the design and installation of new transmission and distribution facilities.Management canno

271、t predict the impact,if any,the EMF issue may have on the Utilities in the future.Global climate change and greenhouse gas(GHG)emissions reduction.The Utilities shares the concerns of many regarding the potential effects of global climate changes and the human contributions to this phenomenon,includ

272、ing burning of fossil fuels for electricity production,transportation,manufacturing and agricultural activities,as well as deforestation.Recognizing that effectively addressing global climate changes requires commitment by the private sector,all levels of government,and the public,the Utilities are

273、committed to taking direct action to mitigate GHG emissions from its operations.See“Environmental regulationGlobal climate change and greenhouse gas emissions reduction”under“Commitments and contingencies”in Note 4 of the Consolidated Financial Statements.Legislation.See“Electric utilityLegislation

274、and regulation”in HEIs MD&A.Commitments and contingencies.See“Selected contractual obligations and commitments”in Hawaiian Electrics MD&A and“Electric utilityCertain factors that may affect future results and financial conditionOther regulatory and permitting contingencies”in HEIs MD&A,Item 1A.Risk

275、Factors,and Note 4 of the Consolidated Financial Statements for a discussion of important commitments and contingencies.Regulation.The PUC regulates the rates,issuance of securities,accounting and certain other aspects of the operations of Hawaiian Electric and its electric utility subsidiaries.See

276、the previous discussion under“Rates”and the discussions under 10“Electric utilityResults of operationsMost recent rate proceedings”and“Electric utilityCertain factors that may affect future results and financial conditionRegulation of electric utility rates”in HEIs MD&A.Any adverse decision or polic

277、y made or adopted by the PUC,or any prolonged delay in rendering a decision,could have a material adverse effect on consolidated Hawaiian Electrics and the Companys results of operations,financial condition or liquidity.On September 15,2014,the State of Hawaii and the U.S.Department of Energy execut

278、ed a MOU recognizing that Hawaii is embarking on the next phase of its clean energy future.The MOU provides the framework for a comprehensive,sustained effort to better realize Hawaiis vast renewable energy potential and allow it to push forward in three main areas:the power sector,transportation an

279、d energy efficiency.This next phase will focus on stimulating deployment of clean energy infrastructure as a catalyst for economic growth,energy system innovation and test bed investments.In 2015,Hawaiis RPS law was amended to require electric utilities to meet an RPS of 15%,30%,40%,70%and 100%by De

280、cember 31,2015,2020,2030,2040 and 2045 respectively.Energy savings resulting from energy efficiency programs do not count toward the RPS since 2014(only electrical generation using renewable energy as a source counts).Certain transactions between HEIs electric public utility subsidiaries(Hawaiian El

281、ectric,Hawaii Electric Light and Maui Electric)and HEI and affiliated interests(as defined by statute)are subject to regulation by the PUC.All contracts of$300,000 or more in a calendar year for management,supervisory,construction,engineering,accounting,legal,financial and similar services and for t

282、he sale,lease or transfer of property between a public utility and affiliated interests must be filed with the PUC to be effective,and the PUC may issue cease and desist orders if such contracts are not filed.All such“affiliated contracts”for capital expenditures(except for real property)must be acc

283、ompanied by comparative price quotations from two nonaffiliates,unless the quotations cannot be obtained without substantial expense.Moreover,all transfers of$300,000 or more of real property between a public utility and affiliated interests require the prior approval of the PUC and proof that the t

284、ransfer is in the best interest of the public utility and its customers.If the PUC,in its discretion,determines that an affiliated contract is unreasonable or otherwise contrary to the public interest,the utility must either revise the contract or risk disallowance of payments under the contract for

285、 rate-making purposes.In rate-making proceedings,a utility must also prove the reasonableness of payments made to affiliated interests under any affiliated contract of$300,000 or more by clear and convincing evidence.In December 1996,the PUC issued an order in a docket that had been opened to review

286、 the relationship between HEI and Hawaiian Electric and the effects of that relationship on the operations of Hawaiian Electric.The order adopted the report of the consultant the PUC had retained and ordered Hawaiian Electric to continue to provide the PUC with periodic status reports on its complia

287、nce with the PUC Agreement(pursuant to which HEI became the holding company of Hawaiian Electric).Hawaiian Electric files such status reports annually.In the order,the PUC also required the Utilities to present a comprehensive analysis of the impact that the holding company structure and investments

288、 in nonutility subsidiaries have on a case-by-case basis on the cost of capital to each utility in future rate cases and remove any such effects from the cost of capital.The Utilities have made presentations in their subsequent rate cases to support their positions that there was no evidence that wo

289、uld modify the PUCs finding that Hawaiian Electrics access to capital did not suffer as a result of HEIs involvement in nonutility activities and that HEIs diversification did not permanently raise or lower the cost of capital incorporated into the rates paid by Hawaiian Electrics utility customers.

290、The Utilities are not subject to regulation by the FERC under the Federal Power Act,except under Sections 210 through 212(added by Title II of PURPA and amended by the Energy Policy Act of 1992),which permit the FERC to order electric utilities to interconnect with qualifying cogenerators and small

291、power producers,and to wheel power to other electric utilities.Title I of PURPA,which relates to retail regulatory policies for electric utilities,and Title VII of the Energy Policy Act of 1992,which addresses transmission access,also apply to the Utilities.The Utilities are also required to file va

292、rious operational reports with the FERC.Because they are located in the State of Hawaii,Hawaiian Electric and its subsidiaries are exempt by statute from limitations set forth in the Powerplant and Industrial Fuel Use Act of 1978 on the use of petroleum as a primary energy source.See also“HEIRegulat

293、ion”above.Environmental regulation.Hawaiian Electric,Hawaii Electric Light and Maui Electric,like other utilities,are subject to periodic inspections by federal,state and,in some cases,local environmental regulatory agencies,including agencies responsible for the regulation of water quality,air qual

294、ity,hazardous and other waste and hazardous materials.These inspections may result in the identification of items needing corrective or other action.Except as otherwise disclosed in this report(see“Certain factors that may affect future results and financial conditionEnvironmental matters”for HEI Co

295、nsolidated,the Electric utility and the Bank sections in HEIs MD&A and Note 4 of the Consolidated Financial Statements,which are incorporated herein by reference),the Company believes that each subsidiary has appropriately responded to environmental 11conditions requiring action and that,as a result

296、 of such actions,such environmental conditions will not have a material adverse effect on the Company or Hawaiian Electric.Water quality controls.The generating stations,substations and other utility facilities operate under federal and state water quality regulations and permits,including but not l

297、imited to the Clean Water Act National Pollution Discharge Elimination System(governing point source discharges,including wastewater and storm water discharges),Underground Injection Control(regulating disposal of wastewater into the subsurface),the Spill Prevention,Control and Countermeasure(SPCC)p

298、rogram,the Oil Pollution Act of 1990(OPA)(governing actual or threatened oil releases and imposing strict liability on responsible parties for clean-up costs and damages to natural resources and property),and other regulations associated with discharges of oil and other substances to surface water.T

299、he federal Environmental Protection Agency(EPA)regulations under OPA also require certain facilities that use or store petroleum to prepare and implement SPCC Plans in order to prevent releases of petroleum to navigable waters of the U.S.The Utilities facilities that are subject to SPCC Plan require

300、ments,including most power plants,base yards,and certain substations,have prepared and are implementing SPCC Plans.The Company believes that each subsidiarys costs of responding to petroleum releases to date will not have a material adverse effect on the respective subsidiary or the Company.Air qual

301、ity controls.The Clean Air Act(CAA)establishes permitting programs to reduce air pollution.The CAA amendments of 1990,established the federal Title V Operating Permit Program(in Hawaii known as the Covered Source Permit program)to ensure compliance with all applicable federal and state air pollution

302、 control requirements.The 1977 CAA Amendments established the New Source Review(NSR)permitting program which affect new or modified generating units by requiring a permit to construct under the CAA and the controls necessary to meet the National Ambient Air Quality Standards(NAAQS).Title V operating

303、 permits have been issued for all of the Utilities affected generating units.Hazardous waste and toxic substances controls.The operations of the electric utility and former freight transportation subsidiaries of HEI are subject to EPA regulations that implement provisions of the Resource Conservatio

304、n and Recovery Act(RCRA),the Comprehensive Environmental Response,Compensation,and Liability Act(CERCLA,also known as Superfund),the Superfund Amendments and Reauthorization Act(SARA),and the Toxic Substances Control Act(TSCA).RCRA underground storage tank(UST)regulations require all facilities that

305、 use USTs for storing petroleum products to comply with established leak detection,spill prevention,standards for tank design and retrofits,financial assurance,and tank decommissioning and closure requirements.All of the Utilities USTs currently meet the applicable requirements.The Emergency Plannin

306、g and Community Right-to-Know Act under SARA Title III requires the Utilities to report potentially hazardous chemicals present in their facilities in order to provide the public with information so that emergency procedures can be established to protect the public in the event of hazardous chemical

307、 releases.Since January 1,1998,the steam electric industry category has been subject to Toxics Release Inventory(TRI)reporting requirements.The TSCA regulations specify procedures for the handling and disposal of polychlorinated biphenyls(PCBs),a compound found in some transformer and capacitor diel

308、ectric fluids.The TSCA regulations also apply to responses to releases of PCBs to the environment.The Utilities have instituted procedures to monitor compliance with these regulations and have implemented a program to identify and replace PCB transformers and capacitors in their systems.In April 201

309、0,the EPA issued an Advance Notice of Proposed Rule Making announcing its intent to reassess PCB regulations.The EPA projects that it will publish a notice of proposed rulemaking in November 2017.Hawaiis Environmental Response Law(ERL),as amended,governs releases of hazardous substances,including oi

310、l,to the environment in areas within the states jurisdiction.Responsible parties under the ERL are jointly,severally,and strictly liable for a release of a hazardous substance.Responsible parties include owners or operators of a facility where a hazardous substance is located and any person who at t

311、he time of disposal of the hazardous substance owned or operated any facility at which such hazardous substance was disposed.The Utilities periodically discover leaking petroleum-containing equipment such as USTs,piping,and transformers.Each subsidiary reports releases from such equipment when and a

312、s required by applicable law and addresses the releases in compliance with applicable regulatory requirements.Research and development.The Utilities expensed approximately$4.2 million,$3.3 million and$2.9 million in 2016,2015 and 2014,respectively,for research and development(R&D).In 2016,2015 and 2

313、014,the electric utilities contributions to the Electric Power Research Institute(EPRI)accounted for approximately 52%,67%and 76%of R&D expenses,respectively.The Utilities continue to collaborate with EPRI,Energy Excelerator,other utilities,national testing labs,leading edge companies and various st

314、akeholders to learn what new technologies and solutions are being developed,tested,and implemented elsewhere 12and can be applied to helping the State achieve a 100%clean energy future.The Utilities utilize an expanded reference of R&D to highlight the demonstration of technologies.Included in the R

315、&D expenses were amounts related to evaluating,testing,and demonstrating new and emerging technologies,biofuels,energy storage,demand response,environmental compliance,power quality,electric and hybrid plug in vehicles and other renewables(e.g.,integration of distributed energy resources onto the ut

316、ility grid,grid modernization,solar resource evaluation,advanced inverter testing,and modeling of high PV penetration circuits).Additional information.For additional information about Hawaiian Electric,see Hawaiian Electrics MD&A,Hawaiian Electrics“Quantitative and Qualitative Disclosures about Mark

317、et Risk”and Hawaiian Electrics Consolidated Financial Statements.Properties.Hawaiian Electric owns four generating plants on the island of Oahu at Waiau,Kahe,Campbell Industrial Park(CIP)and Honolulu.Hawaiian Electric currently operates three of the four generation plants;the fourth,in downtown Hono

318、lulu,was deactivated in 2014.These plants have an aggregate net generating capability of 1,214 MW as of December 31,2016.The City and County of Honolulu is seeking to condemn a portion of the Honolulu plant site for its rail project.The four plants are situated on Hawaiian Electric-owned land having

319、 a combined area of 535 acres and three parcels of land totaling 5.5 acres under leases expiring between December 31,2018 and June 30,2021,with options to extend to June 30,2026.Additionally,Hawaiian Electric has negotiated two leases:1)a 35 year lease,effective September 1,2016 with an option to ex

320、tend an additional 10 years with the Department of the Army to install,operate,and maintain a 50 MW power generation plant on 8.13 acres,and 2)a 37 year lease,effective July 1,2017 or upon PUC approval(whichever is sooner)with the Secretary of the Navy to install,operate and maintain a 28 MW renewab

321、le generation site on 102 acres.In addition,Hawaiian Electric owns a total of 132 acres of land on which substations,transformer vaults,distribution baseyards and the Kalaeloa cogeneration facility are located.Hawaiian Electric owns buildings and approximately 11.6 acres of land located in Honolulu

322、which house its operating and engineering departments.It also leases an office building and certain office spaces in Honolulu,and a warehousing center in Kapolei.The lease for the office building expires in November 2021,with an option to extend through November 2024.Leases for certain office and wa

323、rehouse spaces expire on various dates from May 31,2017 through July 31,2025,some with options to extend to various dates through December 31,2034.Hawaiian Electrics Barbers Point Tank Farm(BPTF)has three storage tanks with an aggregate of 1 million barrels of storage for low sulfur fuel oil(LSFO).T

324、he BPTF is located in Campbell Industrial Park,on the same property as the CIP Generating Station,and is the central fuel storage facility where LSFO purchased by Hawaiian Electric is received and stored.From the BPTF,LSFO is transported via Hawaiian Electric owned underground pipelines to the Kahe

325、and Waiau Power Plants.Hawaiian Electric also has fuel storage facilities at each of its plant sites with a nominal aggregate capacity of 770,000 barrels for LSFO storage,44,000 barrels for diesel storage,and 88,000 barrels for biodiesel storage.Hawaiian Electric also owns a fuel storage facility at

326、 Iwilei that was used to provide fuel to the Honolulu Power Plant.The Honolulu Power Plant was deactivated on January 31,2014 and any future fuel supplies will be delivered directly to the plant by truck.The Iwilei fuel storage facilitys tanks and pumping infrastructure are being removed,and the fac

327、ility is being reconfigured for other purposes.Hawaii Electric Light owns and operates four generating plants on the island of Hawaii in Hilo,Waimea,Keahole and Puna,along with distributed generators at substation sites.These plants have an aggregate net generating capability of 179 MW as of Decembe

328、r 31,2016(excluding several small run-of-river hydro units).Hawaii Electric Lights Shipman plant in Hilo was deactivated in 2014 and retired in 2015.The plants(including a baseyard on the same parcel as the Hilo plant)are situated on Hawaii Electric Light-owned land having a combined area of approxi

329、mately 44 acres.The distributed generators are located within Hawaii Electric Light-owned substation sites having a combined area of approximately 4 acres.Hawaii Electric Light also owns fuel storage facilities at these sites with a usable storage capacity of 48,000 barrels of medium sulfur fuel oil

330、(MSFO)and 81,802 barrels of diesel.There are an additional 19,200 barrels of diesel and 22,770 barrels of MSFO storage capacity for Hawaii Electric Light-owned fuel off-site at Island Energy Services,LLC(Island Energy)-owned terminalling facilities(previously Chevron-owned).Hawaii Electric Light pay

331、s a storage fee to Island Energy and has no other interest in the property,tanks or other infrastructure situated on their property.Hawaii Electric Light also owns 6 acres of land in Kona,which is used for a baseyard,and one acre of land in Hilo,which houses its accounting,customer services and admi

332、nistrative offices.Hawaii Electric Light also leases 3.7 acres of land for its baseyard in Hilo under a lease expiring in 2030.In addition,Hawaii Electric Light owns a total of approximately 100 acres of land,and leases a total of approximately 8.5 acres of land,on which hydro facilities,substations

333、 and switching stations,microwave facilities,and transmission lines are located.The deeds to the sites located in Hilo contain certain restrictions,but the restrictions do not materially interfere with the use of the sites for public utility purposes.On 37.7 acres of its land,Maui Electric:(1)owns and operates two generating plants on the island of Maui,at Kahului and Maalaea,with an aggregate net