HAWAIIAN ELECTRIC INDUSTRIES INCHE
HAWAIIAN ELECTRIC INDUSTRIES INC Leases Disclosure
Note 9 · Leases | ||||||||||||||
The Company leases certain real estate and equipment for various terms under long-term lease agreements. The agreements expire at various dates through 2054 and provide for renewal options up to 10 years. The periods associated with the renewal options are excluded for the purpose of determining the lease term unless the exercise of the renewal option is reasonably certain. In the normal course of business, it is expected that many of these agreements will be replaced by similar agreements. Certain real estate leases require the Company to pay for operating expenses such as common area maintenance, real estate taxes and insurance, which are recognized as variable lease expense when incurred and are not included in the measurement of the lease liability. The Company elected the short-term lease recognition exemption for all of its leases that qualify, and accordingly, does not recognize lease liabilities and ROU assets for all leases that have lease terms that are 12 months or less. The amounts related to short-term leases are not material. The Company elected the practical expedient to not separate lease and non-lease components for its real estate and equipment and fossil fuel and renewable energy PPAs and to separate lease components from non-lease components for renewable energy plus battery storage PPAs.
The Utilities contract with independent power producers to supply energy under long-term power purchase agreements. Certain PPAs are treated as operating leases under the lease standard because the Company elected the practical expedient package under which prior conclusions about lease identification were not reassessed. The fixed capacity payments under the PPAs are included in the lease liability, while the variable lease payments (e.g., payments based on kWh) are excluded from the lease liability. Several as-available PPAs have variable-only payment terms based on production. For PPAs with no minimum lease payments, the Utilities do not recognize any lease liabilities or ROU assets, and the related costs are reported as variable lease costs.
The Utilities’ lease payments for each operating lease agreement were discounted using its estimated unsecured borrowing rates for the appropriate term, reduced for the estimated impact of collateral, which is a reduction of approximately 50 basis points.
The Utilities account for the battery portion of renewable energy plus storage and energy storage PPAs as leases at their commencement dates. As of December 31, 2025, the Utilities recognized additional finance lease liabilities with corresponding ROU assets of $92.4 million, including Hale Kuawehi and Hoohana Solar project that began commercial operations during the year. The timing of the Utilities’ recognition of the expense conforms to ratemaking treatment for the Utilities’ recovery of the cost of electricity and is included in purchased power for the interest and amortization of financing leases related to PPAs. Any material differences between expense recognition and timing of payments are deferred as a regulatory asset or liability in order to match what is being recovered for ratemaking purposes.
Amounts related to the Company’s total lease cost and cash flows arising from lease transactions are as follows:
| HEI consolidated | Hawaiian Electric consolidated | ||||||||||||||||||||||
| Year ended December 31, 2025 | Other leases | PPAs classified as leases | Total | Other leases | PPAs classified as leases | Total | |||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| Operating lease cost | $ | 14,250 | $ | 5,180 | $ | 19,430 | $ | 13,335 | $ | 5,180 | $ | 18,515 | |||||||||||
| Variable lease cost | 5,956 | 192,360 | 198,316 | 5,777 | 192,360 | 198,137 | |||||||||||||||||
| Sublease income | (2,972) | — | (2,972) | (2,972) | — | (2,972) | |||||||||||||||||
| Total operating lease cost | $ | 17,234 | $ | 197,540 | $ | 214,774 | $ | 16,140 | $ | 197,540 | $ | 213,680 | |||||||||||
| Finance lease costs: | |||||||||||||||||||||||
| Amortization of right-of-use assets | $ | 446 | $ | 23,870 | $ | 24,316 | $ | — | $ | 23,870 | $ | 23,870 | |||||||||||
| Interest on lease liabilities | 22 | 41,020 | 41,042 | — | 41,020 | 41,020 | |||||||||||||||||
| Total finance lease cost | $ | 468 | $ | 64,890 | $ | 65,358 | $ | — | $ | 64,890 | $ | 64,890 | |||||||||||
| Other information | |||||||||||||||||||||||
| Cash paid for amounts included in the measurement of lease liabilities: | |||||||||||||||||||||||
| Operating cash flows from operating leases | $ | 15,017 | $ | 5,136 | $ | 20,153 | $ | 14,131 | $ | 5,136 | $ | 19,267 | |||||||||||
Operating cash flows from finance leases | 22 | 40,102 | 40,124 | — | 40,102 | 40,102 | |||||||||||||||||
Financing cash flows from finance leases | 466 | 9,905 | 10,371 | — | 9,905 | 9,905 | |||||||||||||||||
| Weighted-average remaining lease term (in years): | |||||||||||||||||||||||
| Operating leases | 5.8 | 2.0 | 5.2 | 5.8 | 2.0 | 5.2 | |||||||||||||||||
| Finance leases | — | 19.4 | 19.4 | — | 19.4 | 19.4 | |||||||||||||||||
| Weighted-average discount rate: | |||||||||||||||||||||||
| Operating leases | 4.19 | % | 8.78 | % | 4.86 | % | 4.21 | % | 8.78 | % | 4.91 | % | |||||||||||
| Finance leases | — | 8.71 | % | 8.71 | % | — | 8.71 | % | 8.71 | % | |||||||||||||
| HEI consolidated | Hawaiian Electric consolidated | ||||||||||||||||||||||
| Year ended December 31, 2024 | Other leases | PPAs classified as leases | Total | Other leases | PPAs classified as leases | Total | |||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| Operating lease cost | $ | 13,736 | $ | 4,163 | $ | 17,899 | $ | 12,821 | $ | 4,163 | $ | 16,984 | |||||||||||
| Variable lease cost | 5,378 | 222,189 | 227,567 | 5,191 | 222,189 | 227,380 | |||||||||||||||||
| Sublease income | (3,280) | — | (3,280) | (3,280) | — | (3,280) | |||||||||||||||||
Total operating lease cost | $ | 15,834 | $ | 226,352 | $ | 242,186 | $ | 14,732 | $ | 226,352 | $ | 241,084 | |||||||||||
| Finance lease costs: | |||||||||||||||||||||||
| Amortization of right-of-use assets | $ | 574 | $ | 19,498 | $ | 20,072 | $ | — | $ | 19,498 | $ | 19,498 | |||||||||||
| Interest on lease liabilities | 33 | 32,344 | 32,377 | — | 32,344 | 32,344 | |||||||||||||||||
| Total finance lease cost | $ | 607 | $ | 51,842 | $ | 52,449 | $ | — | $ | 51,842 | $ | 51,842 | |||||||||||
| Other information | |||||||||||||||||||||||
| Cash paid for amounts included in the measurement of lease liabilities: | |||||||||||||||||||||||
Operating cash flows from operating leases | $ | 15,604 | $ | 3,871 | $ | 19,475 | $ | 14,739 | $ | 3,871 | $ | 18,610 | |||||||||||
Operating cash flows from finance leases | 33 | 30,939 | 30,972 | — | 30,939 | 30,939 | |||||||||||||||||
Financing cash flows from finance leases | 559 | 4,119 | 4,678 | — | 4,119 | 4,119 | |||||||||||||||||
| Weighted-average remaining lease term (in years): | |||||||||||||||||||||||
Operating leases | 8.2 | 3.0 | 7.2 | 6.4 | 3.0 | 5.6 | |||||||||||||||||
Finance leases | 3.7 | 19.9 | 19.9 | — | 19.9 | 19.9 | |||||||||||||||||
| Weighted-average discount rate: | |||||||||||||||||||||||
Operating leases | 3.08 | % | 8.78 | % | 4.11 | % | 2.95 | % | 8.78 | % | 4.21 | % | |||||||||||
Finance leases | 2.23 | % | 8.50 | % | 8.49 | % | — | 8.50 | % | 8.50 | % | ||||||||||||
| HEI consolidated | Hawaiian Electric consolidated | ||||||||||||||||||||||
| Year ended December 31, 2023 | Other leases | PPAs classified as leases | Total | Other leases | PPAs classified as leases | Total | |||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| Operating lease cost | $ | 16,853 | $ | 4,071 | $ | 20,924 | $ | 15,947 | $ | 4,071 | $ | 20,018 | |||||||||||
| Variable lease cost | 5,813 | 202,556 | 208,369 | 5,605 | 202,556 | 208,161 | |||||||||||||||||
| Sublease income | (3,031) | — | (3,031) | (3,031) | — | (3,031) | |||||||||||||||||
Total operating lease cost | $ | 19,635 | $ | 206,627 | $ | 226,262 | $ | 18,521 | $ | 206,627 | $ | 225,148 | |||||||||||
| Finance lease costs: | |||||||||||||||||||||||
| Amortization of right-of-use assets | $ | 390 | $ | 5,591 | $ | 5,981 | $ | — | $ | 5,591 | $ | 5,591 | |||||||||||
| Interest on lease liabilities | 32 | 6,350 | 6,382 | — | 6,350 | 6,350 | |||||||||||||||||
| Total finance lease cost | $ | 422 | $ | 11,941 | $ | 12,363 | $ | — | $ | 11,941 | $ | 11,941 | |||||||||||
| Other information | |||||||||||||||||||||||
| Cash paid for amounts included in the measurement of lease liabilities: | |||||||||||||||||||||||
Operating cash flows from operating leases | $ | 18,560 | $ | 4,071 | $ | 22,631 | $ | 17,729 | $ | 4,071 | $ | 21,800 | |||||||||||
Operating cash flows from finance leases | 32 | 6,350 | 6,382 | — | 6,350 | 6,350 | |||||||||||||||||
Financing cash flows from finance leases | 391 | 3,128 | 3,519 | — | 3,128 | 3,128 | |||||||||||||||||
| Weighted-average remaining lease term (in years): | |||||||||||||||||||||||
Operating leases | 8.3 | 4.0 | 7.6 | 6.8 | 4.0 | 6.3 | |||||||||||||||||
Finance leases | 1.5 | 20.1 | 20.0 | — | 20.1 | 20.1 | |||||||||||||||||
| Weighted-average discount rate: | |||||||||||||||||||||||
Operating leases | 3.03 | % | 3.50 | % | 3.11 | % | 2.92 | % | 3.50 | % | 3.03 | % | |||||||||||
Finance leases | 3.77 | % | 8.18 | % | 8.18 | % | — | % | 8.18 | % | 8.18 | % | |||||||||||
The following table summarizes the maturity of our operating lease liabilities as of December 31, 2025:
| HEI consolidated | Hawaiian Electric consolidated | ||||||||||||||||||||||
| (in millions) | Other leases1 | PPAs classified as leases | Total | Other leases | PPAs classified as leases | Total | |||||||||||||||||
| 2026 | $ | 16 | $ | 5 | $ | 21 | $ | 15 | $ | 5 | $ | 20 | |||||||||||
| 2027 | 11 | 5 | 16 | 10 | 5 | 15 | |||||||||||||||||
| 2028 | 6 | — | 6 | 6 | — | 6 | |||||||||||||||||
| 2029 | 7 | — | 7 | 7 | — | 7 | |||||||||||||||||
| 2030 | 7 | — | 7 | 7 | — | 7 | |||||||||||||||||
| Thereafter | 13 | — | 13 | 13 | — | 13 | |||||||||||||||||
| Total lease payments | 60 | 10 | 70 | 58 | 10 | 68 | |||||||||||||||||
| Less: Imputed interest | (8) | (1) | (9) | (7) | (1) | (8) | |||||||||||||||||
Total present value of lease payments | $ | 52 | $ | 9 | $ | 61 | $ | 51 | $ | 9 | $ | 60 | |||||||||||
1Amounts do not include $6 million of operating lease liabilities related to Mahipapa leases which are included in “Liabilities held for sale” in the Company’s Consolidated Balance Sheets as of December 31, 2025.
The following table summarizes the maturity of our finance lease liabilities for PPAs as of December 31, 2025:
| HEI consolidated | Hawaiian Electric consolidated | ||||||||||
| (in millions) | PPAs classified as leases | PPAs classified as leases | |||||||||
| 2026 | $ | 55 | $ | 55 | |||||||
| 2027 | 55 | 55 | |||||||||
| 2028 | 55 | 55 | |||||||||
| 2029 | 55 | 55 | |||||||||
| 2030 | 55 | 55 | |||||||||
| Thereafter | 793 | 793 | |||||||||
| Total lease payments | 1,068 | 1,068 | |||||||||
| Less: Imputed interest | (551) | (551) | |||||||||
| Total present value of lease payments | $ | 517 | $ | 517 | |||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Feb 24, 2025 | |
| 2023 | Feb 29, 2024 | |
| 2022 | Feb 27, 2023 | |
| 2021 | Feb 25, 2022 | |
| 2020 | Feb 26, 2021 | |
| 2019 | Feb 28, 2020 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.