The Hawaiian Electric Companies needs a pot of money on hand because they spend money for fuel, operations and capital expenditures before they are reimbursed through ratepayer bills. Therein lies a problem. HECO`s credit rating dropped to junk bond status following the Maui fires. The value of HEI stock collapsed. HECOs ability to borrow funds or to issue stocks is no longer viable.
HECO is seeking to raise funds through other means, first through securitization that failed at the Legislature, and now through selling unused property and by selling accounts receivables.
The utilities want to sell some accounts receivables, but retain the collection of those funds, so a third party does not target late payers.
HECO filed an application with the Public Utilities Commission to establish a one-year and a multi-year credit facility that would have $250 million available for day-to-day borrowing. HECO requested the right to create two subsidiaries to create the multi-million-dollar credit fund.
Life of the Land filed a motion to intervene. Like always, HECO opposed our motion. The Public Utilities Commission permitted Life of the Land to participate in the proceedings, as it has done so in 60 previous Commission proceedings.
The initial amount of money that HECO has on-hand, the amount of money they need for planned capital expenditures, and the amount they would need from the credit fund, are all confidential information not available to the public. As an intervenor, Life of the Land can see the amounts.
One concern Life of the Land has is the ability of the utility to move around funds and pay for part of their Maui fire liability with ratepayer funds. Life of the Land opposes the use of ratepayers’ funds for bailing out the company. All costs associated with the Maui fires must be paid from corporate profits that would have gone to shareholders.
The multi-year credit facility is still being assessed by parties and the Commission.
The Commission approved the one-year credit facility. The Commission established several reporting requirements for the utility`s short-term credit facility. These reports will be reviewed and analyzed by the Commission, the Consumer Advocate, and Life of the Land.
HECO must file documents on any novel use of the funds other than maintaining liquidity for day-to-day operations.
HECO must file quarterly reports on the utility`s overall financial health, including balance sheets, income statements, and cash flow statements, and on the credit facilities loan balances, cash flows, and receivables data. Costs associated with operating the credit facility will be deferred to determine whether such costs are reasonable and reasonably incurred.
There are two entirely separate Commission proceedings underway in which HECO wants to spend nearly $670 million on hardening the grids on Oahu, Maui, Molokai, and Hawai`i islands to prevent wildfires and to withstand extreme weather events. Almost half of the funds would be paid by the federal government and the rest by ratepayers. Life of the Land is in the first proceeding and filed a motion to intervene in the second proceeding.