UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~June 30, ~~2013~~2015

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



Exact Name of Registrant as	Commission	I.R.S. Employer
Specified in Its Charter	File Number	Identification No.
HAWAIIAN ELECTRIC INDUSTRIES, INC.	1-8503	99-0208097
and Principal Subsidiary
HAWAIIAN ELECTRIC COMPANY, INC.	1-4955	99-0040500

State of Hawaii

(State or other jurisdiction of incorporation or organization)

Hawaiian Electric Industries, Inc. – 1001 Bishop Street, Suite 2900, Honolulu, Hawaii 96813

Hawaiian Electric Company, Inc. – 900 Richards Street, Honolulu, Hawaii 96813

(Address of principal executive offices and zip code)

Hawaiian Electric Industries, Inc. – (808) 543-5662

Hawaiian Electric Company, Inc. – (808) 543-7771

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark 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 the past 90 days.



Hawaiian Electric Industries, Inc. Yes x No o		Hawaiian Electric Company, Inc. Yes x No o

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 405 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 o		Hawaiian Electric Company, Inc. Yes x No o

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 o No x		Hawaiian Electric Company, Inc. Yes o No x

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

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuers’ classes of common stock, as of the latest practicable date.

Class of Common Stock		Outstanding ~~October~~July 31, ~~2013~~2015
Hawaiian Electric Industries, Inc. (Without Par Value)		99107,~~605~~456,~~735~~645 Shares
Hawaiian Electric Company, Inc. ($6-2/3 Par Value)		1415,~~665~~805,~~264~~327 Shares (not publicly traded)

Hawaiian Electric Industries, Inc. (HEI) is the sole holder of Hawaiian Electric Company, Inc. (Hawaiian Electric) common stock.

This combined Form 10-Q is separately filed by HEI and Hawaiian Electric. Information contained herein relating to any individual registrant is filed by such registrant on its own behalf. No registrant makes any representation as to information relating to the other registrant, except that information relating to Hawaiian Electric is also attributed to HEI.

Hawaiian Electric Industries, Inc. and Subsidiaries

Hawaiian Electric Company, Inc. and Subsidiaries

Form 10-Q—Quarter ended ~~September~~June 30, ~~2013~~2015

TABLE OF CONTENTS

Page No.
ii	Glossary of Terms
iv	Forward-Looking Statements
	PART I. FINANCIAL INFORMATION
1	Item 1.	Financial Statements
		Hawaiian Electric Industries, Inc. and Subsidiaries
1		Consolidated Statements of Income -three and ~~nine~~six months ended ~~September~~June 30, ~~2013~~2015 and ~~2012~~2014
2		Consolidated Statements of Comprehensive Income -three and ~~nine~~six months ended ~~September~~June 30, ~~2013~~2015 and ~~2012~~2014
3		Consolidated Balance Sheets - ~~September~~June 30, ~~2013~~2015 and December 31, ~~2012~~2014
4		Consolidated Statements of Changes in Shareholders’ Equity -~~nine~~six months ended ~~September~~June 30, ~~2013~~2015 and ~~2012~~2014
5		Consolidated Statements of Cash Flows -~~nine~~six months ended ~~September~~June 30, ~~2013~~2015 and ~~2012~~2014
6		Notes to Consolidated Financial Statements
		Hawaiian Electric Company, Inc. and Subsidiaries
33		Consolidated Statements of Income -three and nine months ended September 30, 2013 and 2012
6		Consolidated Statements of Income -three and six months ended June 30, 2015 and 2014
34		Consolidated Statements of Comprehensive Income -three and nine months ended September 30, 2013 and 2012
6		Consolidated Statements of Comprehensive Income -three and six months ended June 30, 2015 and 2014
35		Consolidated Balance Sheets - September 30, 2013 and December 31, 2012
7		Consolidated Balance Sheets - June 30, 2015 and December 31, 2014
36		Consolidated Statements of Changes in Common Stock Equity -nine months ended September 30, 2013 and 2012
8		Consolidated Statements of Changes in Common Stock Equity -six months ended June 30, 2015 and 2014
37		Consolidated Statements of Cash Flows -nine months ended September 30, 2013 and 2012
9		Consolidated Statements of Cash Flows -six months ended June 30, 2015 and 2014
38		Notes to Consolidated Financial Statements
10		Notes to Consolidated Financial Statements
59	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations
62	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations
59		HEI Consolidated
62		HEI consolidated
64		Electric Utilities
66		Electric Utilities
73		Bank
77		Bank
83	Item 3.	Quantitative and Qualitative Disclosures About Market Risk
85	Item 3.	Quantitative and Qualitative Disclosures About Market Risk
84	Item 4.	Controls and Procedures
86	Item 4.	Controls and Procedures
	PART II.	OTHER INFORMATION
85	Item 1.	Legal Proceedings
86	Item 1.	Legal Proceedings
85	Item 1A.	Risk Factors
87	Item 1A.	Risk Factors
85	Item 5.	Other Information
87	Item 2	Unregistered Sales of Equity Securities and Use of Proceeds
86	Item 6.	Exhibits
87	Item 5.	Other Information
87	Signatures
88	Item 6.	Exhibits
89	Signatures

Hawaiian Electric Industries, Inc. and Subsidiaries

Hawaiian Electric Company, Inc. and Subsidiaries

Form 10-Q—Quarter ended ~~September~~June 30, ~~2013~~2015

GLOSSARY OF TERMS



Terms		Definitions
AES Hawaii		AES Hawaii, Inc.
AFUDC		Allowance for funds used during construction
AOCI		Accumulated other comprehensive income/(loss)
ARO		Asset retirement obligation
ASB		American Savings Bank, F.S.B., a wholly-owned subsidiary of ASB Hawaii, Inc.
ASB Hawaii		ASB Hawaii, Inc. (formerly American Savings Holdings, Inc.), a wholly owned subsidiary of Hawaiian Electric Industries, Inc. and the parent company of American Savings Bank, F.S.B.
ASC		Accounting Standards Codification
ASU		Accounting Standards Update
CIP CT-1		Campbell Industrial Park 110 MW combustion turbine No. 1
CIS		Customer Information System
Company		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, Inc.; Hawaiian Electric Industries Capital Trust II and Hawaiian Electric Industries Capital Trust III (inactive financing entities); and The Old Oahu Tug Service, Inc. (formerly Hawaiian Tug & Barge Corp.).
Consumer Advocate		Division of Consumer Advocacy, Department of Commerce and Consumer Affairs of the State of Hawaii
DBEDT		State of Hawaii Department of Business, Economic Development and Tourism
D&O		Decision and order
DG		Distributed generation
Dodd-Frank Act		Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010
DOH		Department of Health of the State of Hawaii
DRIP		HEI Dividend Reinvestment and Stock Purchase Plan
DSM		Demand-side management
ECAC		Energy cost adjustment clause
EGU		Electrical generating unit
EIP		2010 Equity and Incentive Plan, as amended and restated
Energy Agreement		Agreement, dated October 20, 2008, signed by the Governor of the State of Hawaii, the State of Hawaii Department of Business, Economic Development and Tourism, the Division of Consumer Advocacy of the Department of Commerce and Consumer Affairs, and Hawaiian Electric, for itself and on behalf of its electric utility subsidiaries, committing to actions to develop renewable energy and reduce dependence on fossil fuels in support of the HCEI. In September 2014, the parties to the Energy Agreement concluded that the agreements and policy directives in the Energy Agreement had been advanced or superseded by subsequent events, as well as by decisions and orders issued by the PUC, and accordingly ended the Energy Agreement as of September 14, 2014.
EPA		Environmental Protection Agency — federal
EPS		Earnings per share
ERISA		Employee Retirement Income Security Act of 1974, as amended
EVE		Economic value of equity
Exchange Act		Securities Exchange Act of 1934
FASB		Financial Accounting Standards Board
FDIC		Federal Deposit Insurance Corporation
federal		U.S. Government
FHLB		Federal Home Loan Bank
FHLMC		Federal Home Loan Mortgage Corporation
FNMA		Federal National Mortgage Association
FRB		Federal Reserve Board
GAAP		Accounting principles generally accepted in the United States of America
GHG		Greenhouse gas

Terms		Definitions
AFTAP		Adjusted Funding Target Attainment Percentage
AFUDC		Allowance for funds used during construction
AOCI		Accumulated other comprehensive income/(loss)
ARO		Asset retirement obligation
ASB		American Savings Bank, F.S.B., a wholly-owned subsidiary of American Savings Holdings, Inc.
ASHI		American Savings Holdings, Inc., a wholly owned subsidiary of Hawaiian Electric Industries, Inc. and the parent company of American Savings Bank, F.S.B.
ASU		Accounting Standards Update
CIP CT-1		Campbell Industrial Park 110 MW combustion turbine No. 1
CIS		Customer Information System
Company		Hawaiian Electric Industries, Inc. and its direct and indirect subsidiaries, including, without limitation, Hawaiian Electric Company, Inc. and its subsidiaries (listed under Hawaiian Electric); American Savings Holdings, Inc. and its subsidiary, American Savings Bank, F.S.B.; HEI Properties, Inc.; Hawaiian Electric Industries Capital Trust II and Hawaiian Electric Industries Capital Trust III (inactive financing entities); and The Old Oahu Tug Service, Inc. (formerly Hawaiian Tug & Barge Corp.).
Consumer Advocate		Division of Consumer Advocacy, Department of Commerce and Consumer Affairs of the State of Hawaii
DBEDT		State of Hawaii Department of Business, Economic Development and Tourism
D&O		Decision and order
Dodd-Frank Act		Dodd-Frank Wall Street Reform and Consumer Protection Act
DOH		Department of Health of the State of Hawaii
DRIP		HEI Dividend Reinvestment and Stock Purchase Plan
DSM		Demand-side management
ECAC		Energy cost adjustment clauses
EIP		2010 Equity and Incentive Plan
EGU		Electrical generating unit
Energy Agreement		Agreement dated October 20, 2008 and signed by the Governor of the State of Hawaii, the State of Hawaii Department of Business, Economic Development and Tourism, the Division of Consumer Advocacy of the Department of Commerce and Consumer Affairs, and Hawaiian Electric, for itself and on behalf of its electric utility subsidiaries committing to actions to develop renewable energy and reduce dependence on fossil fuels in support of the HCEI
EPA		Environmental Protection Agency — federal
EPS		Earnings per share
ERISA		Employee Retirement Income Security Act of 1974, as amended
EVE		Economic value of equity
Exchange Act		Securities Exchange Act of 1934
FASB		Financial Accounting Standards Board
FDIC		Federal Deposit Insurance Corporation
federal		U.S. Government
FHLB		Federal Home Loan Bank
FHLMC		Federal Home Loan Mortgage Corporation
FNMA		Federal National Mortgage Association
FRB		Federal Reserve Board

GLOSSARY OF TERMS, continued

Terms		Definitions
GAAP		U.S. generally accepted accounting principles
GHG		Greenhouse gas
GNMA		Government National Mortgage Association
HCEI		Hawaii Clean Energy Initiative
Hawaii Electric Light		Hawaii Electric Light Company, Inc., an electric utility subsidiary of Hawaiian Electric Company, Inc.
Hawaiian Electric		Hawaiian Electric Company, Inc., an electric utility subsidiary of Hawaiian Electric Industries, Inc. and parent company of Hawaii Electric Light Company, Inc., Maui Electric Company, Limited, HECO Capital Trust III (unconsolidated financing subsidiary), Renewable Hawaii, Inc. and Uluwehiokama Biofuels Corp.
HEI		Hawaiian Electric Industries, Inc., direct parent company of Hawaiian Electric Company, Inc., American Savings Holdings, Inc., HEI Properties, Inc., Hawaiian Electric Industries Capital Trust II, Hawaiian Electric Industries Capital Trust III and The Old Oahu Tug Service, Inc. (formerly Hawaiian Tug & Barge Corp.)
HIE		Hawaii Independent Energy, LLC
HEI		Hawaiian Electric Industries, Inc., direct parent company of Hawaiian Electric Company, Inc., ASB Hawaii, Inc., HEI Properties, Inc., Hawaiian Electric Industries Capital Trust II, Hawaiian Electric Industries Capital Trust III and The Old Oahu Tug Service, Inc. (formerly Hawaiian Tug & Barge Corp.)
HEIRSP		Hawaiian Electric Industries Retirement Savings Plan
Hawaii Electric Light		Hawaii Electric Light Company, Inc., an electric utility subsidiary of Hawaiian Electric Company, Inc.
HELOC		Home equity line of credit
HPOWER		City and County of Honolulu with respect to a power purchase agreement for a refuse-fired plant
Hpower		City and County of Honolulu with respect to a power purchase agreement for a refuse-fired plant
IPP		Independent power producer
IRP		Integrated resource planning
Kalaeloa		Kalaeloa Partners, L.P.
KW		Kilowatt
kW		Kilowatt/s (as applicable)
KWH		Kilowatthour/s (as applicable)
LTIP		Long-term incentive plan
MAP-21		Moving Ahead for Progress in the 21st Century Act
LGD		Loss given default
Maui Electric		Maui Electric Company, Limited, an electric utility subsidiary of Hawaiian Electric Company, Inc.
Merger		As provided in the Merger Agreement, merger of Merger Sub I with and into HEI, with HEI surviving, and then merger of HEI with and into Merger Sub II, with Merger Sub II surviving as a wholly owned subsidiary of NEE
Merger Agreement		Agreement and Plan of Merger by and among HEI, NEE, Merger Sub II and Merger Sub I, dated December 3, 2014
Merger Sub I		NEE Acquisition Sub II, Inc., a Delaware corporation and a wholly owned subsidiary of NEE
Merger Sub II		NEE Acquisition Sub I, LLC, a Delaware limited liability company and a wholly owned subsidiary of NEE
MOU		Memorandum of understanding
MW		Megawatt/s (as applicable)
NEE		NextEra Energy, Inc.
NII		Net interest income
NQSO		Nonqualified stock option
O&M		Other operation and maintenance
OCC		Office of the Comptroller of the Currency
OPEB		Postretirement benefits other than pensions
PPA		Power purchase agreement
PPAC		Purchased power adjustment clause
PUC		Public Utilities Commission of the State of Hawaii
RAM		Revenue adjustment mechanism
PV		Photovaltaic
RAM		Rate adjustment mechanism
RBA		Revenue balancing account
RFP		Request for ~~proposal~~proposals
REIP		Renewable Energy Infrastructure Program
RHI		Renewable Hawaii, Inc., a wholly owned subsidiary of Hawaiian Electric Company, Inc.
ROACE		Return on average common equity
RORB		Return on ~~average~~ rate base
RPS		Renewable portfolio ~~standard~~standards
SAR		Stock appreciation right
SEC		Securities and Exchange Commission
See		Means the referenced material is incorporated by reference
SOIP		1987 Stock Option and Incentive Plan, as amended
Spin-Off		The distribution to HEI shareholders of all of the common stock of ASB Hawaii immediately prior to the Merger
TDR		Troubled debt restructuring
UBC		Uluwehiokama Biofuels Corp., a non-regulated subsidiary of Hawaiian Electric Company, Inc.
Trust III		HECO Capital Trust III
Utilities		Hawaiian Electric Company, Inc., Hawaii Electric Light Company, Inc. and Maui Electric Company, Limited
VIE		Variable interest entity

iii

FORWARD-LOOKING STATEMENTS

This report and other presentations made by Hawaiian Electric Industries, Inc. (HEI) and Hawaiian Electric Company, Inc. (Hawaiian Electric) and their subsidiaries contain “forward-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 “expects,” “anticipates,” “intends,” “plans,” “believes,” “predicts,” “estimates” or similar expressions. In addition, any statements concerning 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 assumptions 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 factors 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~~successful ~~of the Hawaii tourism, defense~~ and ~~construction~~timely ~~industries,~~completion ~~the strength or weakness~~ of the ~~Hawaii~~proposed ~~and~~Merger ~~continental~~with ~~U.S.~~NextEra ~~real estate markets (including the fair value and/or the actual performance of collateral underlying loans held by American Savings Bank~~Energy, FInc.~~S.B.~~ (~~ASB~~NEE), which could ~~result~~be inmaterially ~~higher~~and ~~loan~~adversely ~~loss~~affected ~~provisions and write-offs)~~by, ~~decisions~~among ~~concerning~~other ~~the~~things, ~~extent~~resolving of the ~~presence~~litigation ofbrought ~~the federal government and military~~ in ~~Hawaii~~connection ~~(including~~with the ~~effects~~proposed ~~of sequestration)~~Merger, ~~the~~obtaining ~~implications~~ (and ~~potential~~the ~~impacts~~timing ~~of U.S.~~ and ~~foreign~~terms ~~capital~~ and ~~credit market~~ conditions ~~and~~of) ~~federal,~~required ~~state~~governmental and ~~international~~regulatory ~~responses to those conditions~~approvals, and ~~the~~ability ~~potential~~to ~~impacts~~maintain ofrelationships ~~global~~with ~~developments~~employees, ~~(including~~customers ~~global~~or ~~economic conditions and uncertainties~~suppliers, ~~unrest,~~as ~~conflict~~well ~~and~~as the ~~overthrow~~ability ofto ~~governmental~~integrate ~~regimes in North Africa and~~ the ~~Middle East, terrorist acts, the war on terrorism, continuing U.S. presence in Afghanistan and potential conflict or crisis with North Korea or Iran)~~businesses;

• the ~~effects~~ability of ~~future~~ASB ~~actions~~to oroperate ~~inaction~~successfully ofafter the ~~U.S.~~Spin-Off ~~government or related agencies, including those related to the U.S. debt ceiling, a shutdown~~ of ~~the~~its ~~federal~~parent ~~government,~~ASB ~~or monetary policy~~Hawaii;

• ~~weather~~international, national and ~~natural~~local ~~disasters~~economic conditions, including the state of the Hawaii tourism, defense and construction industries, the strength or weakness of the Hawaii and continental U.S. real estate markets (eincluding the fair value and/or the actual performance of collateral underlying loans held by American Savings Bank, F.gS.B. (ASB), ~~hurricanes~~which could result in higher loan loss provisions and write-offs), ~~earthquakes~~decisions concerning the extent of the presence of the federal government and military in Hawaii, ~~tsunamis~~the implications and potential impacts of U.S. and foreign capital and credit market conditions and federal, ~~lightning~~state ~~strikes~~and international responses to those conditions, and the potential ~~effects~~impacts of ~~climate~~global ~~change~~developments (including global economic conditions and uncertainties, ~~such~~unrest, asongoing ~~more~~conflicts ~~severe~~in ~~storms~~North Africa and ~~rising~~the ~~sea~~Middle ~~levels)~~East, ~~including~~terrorist ~~their~~acts, ~~impact~~potential onconflict ~~Company~~or ~~operations~~crisis ~~and~~with North Korea or Iran, developments in the ~~economy~~Ukraine and potential pandemics);


•	the effects of future actions or inaction of the U.S. government or related agencies, including those related to the U.S. debt ceiling and monetary policy;


•	weather and natural disasters (e.g., hurricanes, earthquakes, tsunamis, lightning strikes, lava flows and the potential effects of climate change, such as more severe storms and rising sea levels), including their impact on the Company's 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 capital markets (e.g., to obtain commercial paper and other short-term and long-term debt financing, (including lines of credit), and, toin ~~access~~the ~~capital~~case ~~markets~~of HEI, to issue ~~HEI~~ common stock) under volatile and challenging market conditions, and the cost of such financings, if available;


•	the risks inherent in changes in the value of the Company’s pension and other retirement plan assets and ASB’s 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 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, which may have an adverse impact on ASB’s cost of funds);

• the implementation of the Energy Agreement with the State of Hawaii and Consumer Advocate (Energy Agreement), setting forth the goals and objectives of a Hawaii Clean Energy Initiative (HCEI), and the fulfillment by the electric utilities of their commitments under the Energy Agreement (given the Public Utilities Commission of the State of Hawaii (PUC~~) approvals needed; the PUC~~’s potential delay in considering (and potential disapproval of actual or proposed) Hawaii Clean Energy Initiative (HCEI)-related costs; reliance by the ~~Company~~Utilities on outside parties such as the state, independent power producers (IPPs) and developers; potential changes in political support for the HCEI; and uncertainties surrounding solar power, wind power, proposed undersea cables, biofuels, environmental assessments and the impacts of implementation of the HCEI on future costs of electricity);

• ~~capacity~~the ~~and~~ability ~~supply~~of ~~constraints~~the orUtilities ~~difficulties~~to develop, ~~especially~~implement ifand ~~generating~~recover ~~units~~the ~~(utility-owned~~costs orof ~~IPP-owned)~~implementing ~~fail~~the orUtilities’ ~~measures~~action ~~such~~plans asand ~~demand-side~~business ~~management~~model changes that are being developed in response to the four orders that the Public Utilities Commission of the State of Hawaii (~~DSM~~PUC) issued in April 2014, ~~distributed~~in ~~generation~~which the PUC: directed the Utilities to develop, ~~combined~~among ~~heat~~other things, Power Supply Improvement Plans, a Demand Response Portfolio Plan and ~~power~~a orDistributed ~~other~~Generation ~~firm~~Interconnection ~~capacity~~Plan; ~~supply-side~~described ~~resources~~the ~~fall~~PUC’s ~~short~~inclinations on the future of ~~achieving~~Hawaii’s ~~their~~electric ~~forecasted~~utilities ~~benefits~~and orthe ~~are~~vision, ~~otherwise~~business ~~insufficient~~strategies and regulatory policy changes required to ~~reduce~~align orthe ~~meet~~Utilities’ ~~peak~~business ~~demand~~model with customer interests and the state’s public policy goals; and emphasized the need to “leap ahead” of other states in creating a 21st century generation system and modern transmission and distribution grids;

• ~~fuel~~capacity ~~oil~~and ~~price~~supply ~~changes~~constraints or difficulties, ~~performance~~especially byif ~~suppliers~~generating ofunits ~~their~~(utility-owned ~~fuel~~or ~~oil~~IPP-owned) ~~delivery~~fail ~~obligations~~or measures such as demand-side management (DSM), distributed generation (DG), combined heat and ~~the~~power ~~continued~~or ~~availability~~other tofirm ~~the~~capacity ~~electric~~supply-side ~~utilities~~resources fall short of achieving their ~~energy~~forecasted ~~cost~~benefits ~~adjustment~~or ~~clauses~~are ~~(ECACs)~~otherwise insufficient to reduce or meet peak demand;

• ~~the~~fuel ~~continued~~oil ~~availability~~price tochanges, ~~the~~delivery ~~electric utilities~~ of ~~other~~adequate ~~cost~~fuel ~~recovery~~by ~~mechanisms,~~suppliers ~~including~~and the ~~purchased~~continued ~~power~~availability ~~adjustment~~to ~~clauses~~the ~~(PPACs),~~electric ~~revenue~~utilities ~~adjustment~~of ~~mechanisms~~their ~~(RAMs)~~energy ~~and~~cost ~~pension~~adjustment ~~and~~clauses ~~postretirement benefits other than pensions~~ (~~OPEB~~ECACs) ~~tracking mechanisms, and the continued decoupling of revenues from sales~~;


•	the continued availability to the electric utilities 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 revenues from sales to mitigate the effects of declining kilowatthour sales;


•	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, ~~as contemplated under the Energy Agreement,~~ including the availability and cost of 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 will 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 ~~ability~~potential ofthat, as IPP contracts near the ~~electric~~end ~~utilities~~of totheir ~~negotiate~~terms, ~~periodically,~~there ~~favorable~~may ~~agreements~~be less economic incentive for ~~significant~~the ~~resources~~IPPs ~~such~~to asmake ~~fuel~~investments ~~supply~~in ~~contracts~~their ~~and~~units ~~collective~~to ~~bargaining~~ensure ~~agreements~~the availability of their units;

• ~~new~~the ~~technological~~ability ~~developments~~of ~~that could affect~~ the ~~operations~~Utilities ~~and~~to ~~prospects~~negotiate, ofperiodically, ~~HEI~~favorable ~~and~~agreements ~~its~~for ~~subsidiaries~~significant ~~(including~~resources ~~Hawaiian~~such ~~Electric~~as ~~and~~fuel ~~its~~supply ~~subsidiaries~~contracts and ~~ASB)~~collective orbargaining ~~their competitors~~agreements;

• ~~cyber~~new ~~security~~technological ~~risks~~developments ~~and~~that ~~the~~could ~~potential~~affect ~~for~~the ~~cyber~~operations ~~incidents,~~and ~~including~~prospects ~~potential~~of ~~incidents at~~ HEI, ~~ASB~~ and ~~Hawaiian~~ASB ~~Electric~~or ~~and~~ their subsidiaries (including at ASB branches and at the 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 other general information technology controlscompetitors;

• ~~federal,~~new ~~state,~~technological ~~county and international governmental and regulatory actions~~developments, such as existing, new and changes in laws, rules and regulations applicable to HEI, Hawaiian Electric, ASB and their subsidiaries (including changes in taxation, increases in capital requirements, regulatory changes resulting from the ~~HCEI,~~commercial ~~environmental~~development ~~laws and regulations (including resulting compliance costs and risks~~ of ~~fines~~energy ~~and~~storage ~~penalties~~ and~~/or~~ ~~liabilities)~~microgrids, ~~the regulation of greenhouse gas (GHG) emissions, governmental fees and assessments (such as Federal Deposit Insurance Corporation assessments), and potential carbon “cap and trade” legislation~~ that ~~may~~could ~~fundamentally~~affect ~~alter~~the ~~costs~~operations toof ~~produce electricity and accelerate~~ the ~~move to renewable generation)~~Utilities;


•	cyber security risks and the potential 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 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 policy 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 “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 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 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 agencies 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 renewable portfolio standards (RPS));

• potential enforcement actions by the Office of the Comptroller of the Currency (OCC), the Federal 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 protection laws and regulations or with respect to capital adequacy);

• the ability of the ~~electric~~Utilities ~~utilities~~ to recover increasing costs and earn a reasonable return on capital investments not covered by ~~revenue adjustment mechanisms~~RAMs;


•	the risks associated with the geographic concentration of HEI’s businesses and ASB’s loans, ASB’s concentration in a single product type (i.e., first mortgages) and ASB’s significant credit relationships (i.e., concentrations of large loans and/or credit lines with certain customers);

• changes in accounting principles applicable to HEI, ~~Hawaiian~~the ~~Electric,~~Utilities ~~ASB~~ and ~~their subsidiaries~~ASB, including the ~~possible~~ adoption of ~~International Financial Reporting Standards or~~ new U.S. accounting standards, the potential 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 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 ASB’s loan portfolio credit profile and asset quality which may increase or decrease the required level of provision for loan losses, allowance for loan losses and charge-offs;


•	changes in ASB’s deposit cost or mix which may have an adverse impact on ASB’s cost of funds;

• the final outcome of tax positions taken by HEI, ~~Hawaiian~~the ~~Electric,~~Utilities ~~ASB~~ and ~~their subsidiaries~~ASB;


•	the risks of suffering losses and incurring 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 described elsewhere in this report and in other reports (e.g., “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K) 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 are 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 as a result of new information, future events or otherwise.

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Hawaiian Electric Industries, Inc. and Subsidiaries

Consolidated Statements of Income (unaudited)

Three months ended September 30

Nine months ended September 30

Three months ended June 30

Six months ended June 30

(in thousands, except per share amounts)

~~2013~~2015

~~2012~~2014

~~2013~~2015

~~2012~~2014

Revenues

Electric utility

~~766~~558,~~115~~163

~~801~~738,~~095~~429

21,~~216~~131,~~076~~605

21,~~340~~458,~~257~~491

Bank

65,~~058~~783

6660,~~596~~616

~~195~~130,~~841~~131

~~196~~124,~~569~~235

Other

56(34

)

29(388

)

~~106~~38

22(320

)

Total revenues

~~831~~623,~~229~~912

~~867~~798,~~720~~657

21,~~412~~261,~~023~~774

21,~~536~~582,~~848~~406

Expenses

Electric utility

~~694~~492,~~201~~002

~~726~~668,~~276~~361

21,~~030~~007,~~071~~808

21,~~146~~317,~~688~~757

Bank

4246,~~223~~057

4442,~~974~~660

~~126~~89,~~550~~774

~~130~~83,~~161~~748

Other

413,~~706~~123

4,~~768~~453

1221,~~276~~956

138,~~075~~504

Total expenses

~~741~~551,~~130~~182

~~776~~715,~~018~~474

21,~~168~~119,~~897~~538

21,~~289~~410,~~924~~009

Operating income (loss)

Electric utility

7166,~~914~~161

7470,~~819~~068

~~186~~123,~~005~~797

~~193~~140,~~569~~734

Bank

2219,~~835~~726

2117,~~622~~956

6940,~~291~~357

6640,~~408~~487

Other

(413,~~650~~157

)

(4,~~739~~841

)

(1221,~~170~~918

)

(138,~~053~~824

)

Total operating income

9072,~~099~~730

9183,~~702~~183

~~243~~142,~~126~~236

~~246~~172,~~924~~397

Interest expense—other than on deposit liabilities and other bank borrowings

(20,304

)

(20,020

)

(59,705

)

(58,758

)

Interest expense, net—other than on deposit liabilities and other bank borrowings

(18,906

)

(20,022

)

(38,006

)

(39,478

)

Allowance for borrowed funds used during construction

~~498~~682

~~688~~523

1,~~626~~181

21,~~451~~137

Allowance for equity funds used during construction

1,~~255~~896

1,~~611~~387

43,~~030~~309

52,~~548~~996

Income before income taxes

7156,~~548~~402

7365,~~981~~071

~~189~~108,~~077~~720

~~196~~137,~~165~~052

Income taxes

2220,~~841~~911

2523,~~804~~317

6540,~~157~~890

6949,~~926~~038

Net income

4835,~~707~~491

4841,~~177~~754

~~123~~67,~~920~~830

~~126~~88,~~239~~014

Preferred stock dividends of subsidiaries

~~471~~473

~~1,417~~946

Net income for common stock

4835,~~236~~018

4741,~~706~~281

~~122~~66,~~503~~884

~~124~~87,~~822~~068

Basic earnings per common share

0.4933

0.4941

10.2463

10.2986

Diluted earnings per common share

0.4833

0.4941

10.2363

10.2985

Dividends per common share

0.31

0.9362

Weighted-average number of common shares outstanding

99107,~~204~~418

97101,~~157~~495

98105,~~670~~361

96101,~~674~~439

Net effect of potentially dilutive shares

~~614~~276

~~361~~330

~~620~~298

~~423~~606

Adjusted weighted-average shares

99107,~~818~~694

97101,~~518~~825

99105,~~290~~659

97102,~~097~~045

The accompanying notes are an integral part of these consolidated financial statements.

Hawaiian Electric Industries, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income (unaudited)

	Three months ended September 30						Nine months ended September 30
	Three months ended June 30						Six months ended June 30
(in thousands)	~~2013~~2015			~~2012~~2014			~~2013~~2015			~~2012~~2014
Net income for common stock	$	4835,~~236~~018		$	4741,~~706~~281		$	~~122~~66,~~503~~884		$	~~124~~87,~~822~~068
Other comprehensive income (loss), net of taxes:
Net unrealized gains (losses) on securities:
Net unrealized gains (losses) on available-for-sale investment securities:
Net unrealized gains (losses) on securities arising during the period, net of (taxes) benefits of $1,049 and ($689) for the three months ended September 30, 2013 and 2012 and $7,081 and ($1,261) for the nine months ended September 30, 2013 and 2012, respectively	(1,589		)	1,043			(10,724		)	1,910
Net unrealized gains (losses) on available-for-sale investment securities arising during the period, net of (taxes) benefits of $2,439, $(1,679), $161 and $(3,343) for the respective periods	(3,694		)	2,543			(243		)	5,063
Less: reclassification adjustment for net realized gains included in net income, net of taxes of nil for the three months ended September 30, 2013 and 2012 and $488 and $53 for the nine months ended September 30, 2013 and 2012, respectively	—			—			(738		)	(81		)
Less: reclassification adjustment for net realized gains included in net income, net of taxes of nil, nil, nil and $1,132 for the respective periods	—			—			—			(1,715		)
Derivatives qualified as cash flow hedges:
Less: reclassification adjustment to net income, net of tax benefits of $37 for the three months ended September 30, 2013 and 2012 and $112 for the nine months ended September 30, 2013 and 2012	59			59			177			177
Less: reclassification adjustment to net income, net of tax benefits of $38, $38, $75 and $75 for the respective periods	59			59			118			118
Retirement benefit plans:
Less: amortization of transition obligation, prior service credit and net losses recognized during the period in net periodic benefit cost, net of tax benefits of $3,697 and $2,443 for the three months ended September 30, 2013 and 2012 and $11,173 and $7,321 for the nine months ended September 30, 2013 and 2012, respectively	5,789			3,826			17,490			11,467
Less: amortization of prior service credit and net losses recognized during the period in net periodic benefit cost, net of tax benefits of $3,691, $1,836, $7,177, and $3,632 for the respective periods	5,780			2,873			11,239			5,686
Less: reclassification adjustment for impact of D&Os of the PUC included in regulatory assets, net of taxes of $3,284 and $2,129 for the three months ended September 30, 2013 and 2012 and $9,852 and $6,386 for the nine months ended September 30, 2013 and 2012, respectively	(5,156		)	(3,342		)	(15,468		)	(10,026		)
Less: reclassification adjustment for impact of D&Os of the PUC included in regulatory assets, net of taxes of $3,359, $1,641, $6,486 and $3,239 for the respective periods	(5,272		)	(2,575		)	(10,183		)	(5,085		)
Other comprehensive income (loss), net of taxes	(~~897~~3,127		)	12,~~586~~900			~~(9,263~~931		)	34,~~447~~067
Comprehensive income attributable to Hawaiian Electric Industries, Inc.	$	4731,~~339~~891		$	4944,~~292~~181		$	~~113~~67,~~240~~815		$	~~128~~91,~~269~~135

The accompanying notes are an integral part of these consolidated financial statements.

Hawaiian Electric Industries, Inc. and Subsidiaries

Consolidated Balance Sheets (unaudited)

(dollars in thousands)	~~September~~June 30, ~~2013~~2015			December 31, 2014			~~December 31, 2012~~
Assets
Cash and cash equivalents	$	300,687		$	~~215~~175,~~042~~542					$	~~219,662~~
Accounts receivable and unbilled revenues, net	269,207			~~350~~313,~~083~~696						~~362,823~~
Available-for-sale investment and mortgage-related securities				535,264						671,358
Available-for-sale investment securities, at fair value	693,520			550,394
Investment in stock of Federal Home Loan Bank of Seattle				93,413						96,022
Stock in Federal Home Loan Bank, at cost	10,678			69,302
Loans receivable held for investment, net	4,410,817			4,~~005~~389,~~132~~033						~~3,737,233~~
Loans held for sale, at lower of cost or fair value	5,581			58,~~829~~424						~~26,005~~
Property, plant and equipment, net of accumulated depreciation of $2,173,583 in 2013 and $2,125,286 in 2012				3,776,305						3,594,829
Property, plant and equipment, net of accumulated depreciation of $2,288,804 and $2,250,950 at the respective dates	4,269,241			4,148,774
Regulatory assets	904,559			~~890~~905,~~419~~264						~~864,596~~
Other	493,151			~~475~~542,~~335~~523						~~494,414~~
Goodwill	82,190			82,190						~~82,190~~
Total assets	$	11,439,631		$	1011,~~429~~185,~~012~~142					$	~~10,149,132~~
Liabilities and shareholders’ equity
Liabilities
Accounts payable	$	183,094		$	~~206~~186,~~803~~425					$	~~212,379~~
Interest and dividends payable	25,360			2725,~~232~~336						~~26,258~~
Deposit liabilities	4,803,271			4,~~310~~623,~~842~~415						~~4,229,916~~
Short-term borrowings—other than bank	124,543			~~131~~118,~~341~~972						~~83,693~~
Other bank borrowings	314,157			~~239~~290,~~612~~656						~~195,926~~
Long-term debt, net—other than bank	1,506,546			1,~~422~~506,~~880~~546						~~1,422,872~~
Deferred income taxes	632,718			~~493~~633,~~662~~570						~~439,329~~
Regulatory liabilities	357,089			~~337~~344,~~720~~849						~~322,074~~
Contributions in aid of construction	482,760			~~425~~466,~~916~~432						~~405,520~~
Defined benefit pension and other postretirement benefit plans liability	615,945			~~630~~632,~~904~~845						~~656,394~~
Other	461,335			~~512~~531,~~342~~230						~~526,613~~
Total liabilities	9,506,818			89,~~739~~360,~~254~~276						~~8,520,974~~
Preferred stock of subsidiaries - not subject to mandatory redemption	34,293			34,293						~~34,293~~
Commitments and contingencies (Note 8)
Commitments and contingencies (Notes 4 and 5)
Shareholders’ equity
Preferred stock, no par value, authorized 10,000,000 shares; issued: none	—			—						—
Common stock, no par value, authorized 200,000,000 shares; issued and outstanding: 99,541,518 shares in 2013 and 97,928,403 shares in 2012				1,443,583						1,403,484
Common stock, no par value, authorized 200,000,000 shares; issued and outstanding: 107,446,530 shares and 102,565,266 shares at the respective dates	1,626,569			1,521,297
Retained earnings	298,398			~~247~~296,~~568~~654						~~216,804~~
Accumulated other comprehensive income (loss), net of taxes
Accumulated other comprehensive loss, net of tax benefits	(26,447		)	(27,378		)
Net unrealized gains (losses) on securities	$	(701	)				$	10,761
Total shareholders’ equity	1,898,520			1,790,573
Unrealized losses on derivatives	(583		)				(760		)
Total liabilities and shareholders’ equity	$	11,439,631		$	11,185,142
Retirement benefit plans	(34,402		)	(35,686		)	(36,424		)	(26,423		)
Total shareholders’ equity				1,655,465						1,593,865
Total liabilities and shareholders’ equity				$	10,429,012					$	10,149,132

The accompanying notes are an integral part of these consolidated financial statements.

Hawaiian Electric Industries, Inc. and Subsidiaries

Consolidated Statements of Changes in Shareholders’ Equity (unaudited)

	Common stock			Retained			Accumulatedothercomprehensive
(in thousands, except per share amounts)	Shares	Amount		Earnings			income (loss)			Total
Balance, December 31, 2012	97,928	$	1,403,484	$	216,804		$	(26,423	)	$	1,593,865
Balance, December 31, 2014	102,565	$	1,521,297	$	296,654		$	(27,378	)	$	1,790,573
Net income for common stock	—	—		~~122~~66,~~503~~884			—			~~122~~66,~~503~~884
Other comprehensive loss, net of tax benefits	—	—		—			(9,263		)	(9,263		)
Other comprehensive income, net of taxes	—	—		—			931			931
Issuance of common stock, net	14,~~614~~882	40105,~~099~~272		—			—			40105,~~099~~272
Common stock dividends ($0.93 per share)	—	—		(91,739		)	—			(91,739		)
Common stock dividends ($0.62 per share)	—	—		(65,140		)	—			(65,140		)
Balance, September 30, 2013	99,542	$	1,443,583	$	247,568		$	(35,686	)	$	1,655,465
Balance, June 30, 2015	107,447	$	1,626,569	$	298,398		$	(26,447	)	$	1,898,520
Balance, December 31, 2011	96,038	$	1,349,446	$	198,397		$	(19,137	)	$	1,528,706
Balance, December 31, 2013	101,260	$	1,488,126	$	255,030		$	(16,750	)	$	1,726,406
Net income for common stock	—	—		~~124~~87,~~822~~068			—			~~124~~87,~~822~~068
Other comprehensive income, net of taxes	—	—		—			34,~~447~~067			34,~~447~~067
Issuance of common stock, net	~~1,387~~300	405,~~161~~310		—			—			405,~~161~~310
Dividend equivalents paid on equity-classified awards	—	—		(99		)	—			(99		)
Common stock dividends ($0.62 per share)	—	—		(62,916		)	—			(62,916		)
Common stock dividends ($0.93 per share)	—	—		(89,902		)	—			(89,902		)
Balance, June 30, 2014	101,560	$	1,493,436	$	279,182		$	(12,683	)	$	1,759,935
Balance, September 30, 2012	97,425	$	1,389,607	$	233,218		$	(15,690	)	$	1,607,135

The accompanying notes are an integral part of these consolidated financial statements.

Hawaiian Electric Industries, Inc. and Subsidiaries

Consolidated Statements of Cash Flows (unaudited)

Nine months ended September 30	2013			2012
Six months ended June 30	2015			2014
(in thousands)
Cash flows from operating activities
Net income	$	~~123~~67,~~920~~830		$	~~126~~88,~~239~~014
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation of property, plant and equipment	~~120~~91,~~355~~731			~~112~~86,~~946~~397
Other amortization	24,~~352~~320			4,~~811~~014
Provision for loan losses	~~953~~2,439			92,~~504~~016
Loans receivable originated and purchased, held for sale	(~~199~~168,~~772~~921		)	(~~304~~69,~~289~~656		)
Proceeds from sale of loans receivable, held for sale	~~223~~173,~~221~~267			~~302~~75,~~844~~040
Gain on sale of credit card portfolio	(2,251		)	—
Increase in deferred income taxes	22,980			28,570
Change in deferred income taxes	60,580			82,582
Excess tax benefits from share-based payment arrangements	(984		)	(267		)
Excess tax benefits from share-based payment arrangements	(469		)	(65		)
Allowance for equity funds used during construction	(3,309		)	(2,996		)
Allowance for equity funds used during construction	(4,030		)	(5,548		)
Change in cash overdraft	193			(1,038		)
Changes in assets and liabilities
Decrease (increase) in accounts receivable and unbilled revenues, net	1244,~~740~~489			(302,~~610~~986		)
Decrease (increase) in fuel oil stock	24,332			(31,372		)
Increase in fuel oil stock	(2,362		)	(27,206		)
Increase in regulatory assets	(5319,~~314~~976		)	(5717,~~793~~731		)
Decrease in accounts, interest and dividends payable	(2156,~~708~~076		)	(564,~~905~~843		)
Decrease in prepaid and accrued income taxes and utility revenue taxes	(19,212		)	(5,121		)
Change in prepaid and accrued income taxes and utility revenue taxes	(4,390		)	(32,510		)
Contributions to defined benefit pension and other postretirement benefit plans	(62,279		)	(64,006		)
Increase (decrease) in defined benefit pension and other postretirement benefit plans liability	218			(1,714		)
Other increase in defined benefit pension and other postretirement benefit plans liability	61,770			49,950
Change in other assets and liabilities	(47,146		)	(16,909		)
Change in other assets and liabilities	(20,462		)	(62,563		)
Net cash provided by operating activities	104,303			46,195
Net cash provided by operating activities	246,726			121,604
Cash flows from investing activities
Available-for-sale investment and mortgage-related securities purchased	(39,721		)	(146,794		)
Available-for-sale investment securities purchased	(208,110		)	(125,531		)
Principal repayments on available-for-sale investment and mortgage-related securities	84,487			104,310
Principal repayments on available-for-sale investment securities	63,568			33,202
Proceeds from sale of available-for-sale investment and mortgage-related securities	71,367			3,548
Proceeds from sale of available-for-sale investment securities	—			79,564
Net increase in loans held for investment	(293,996		)	(75,982		)
Redemption of stock from Federal Home Loan Bank	58,623			11,683
Proceeds from sale of real estate acquired in settlement of loans	8,777			9,659
Net increase in loans held for investment	(23,206		)	(137,122		)
Capital expenditures	(247,392		)	(225,961		)
Proceeds from sale of real estate acquired in settlement of loans	1,258			2,162
Contributions in aid of construction	23,633			33,106
Capital expenditures	(142,236		)	(149,253		)
Proceeds from sale of credit card portfolio	26,386			—
Contributions in aid of construction	19,089			13,209
Other	3,~~035~~308			~~865~~(16		)
Net cash used in investing activities	(~~363~~227,~~424~~706		)	(~~297~~272,~~249~~102		)
Cash flows from financing activities
Net increase in deposit liabilities	80179,~~926~~856			56152,~~756~~383
Net increase in short-term borrowings with original maturities of three months or less	475,~~648~~571			1379,~~398~~693
Net decrease in retail repurchase agreements	(6,314		)	(22,011		)
Net increase (decrease) in retail repurchase agreements	13,508			(2,053		)
Proceeds from other bank borrowings	~~120~~10,000			—
Repayments of other bank borrowings	(70,000		)	—
Proceeds from issuance of long-term debt	—			125,000
Proceeds from issuance of long-term debt	50,000			457,000
Repayment of long-term debt	—			(100,000		)
Repayment of long-term debt	(50,000		)	(368,500		)
Excess tax benefits from share-based payment arrangements	984			267
Excess tax benefits from share-based payment arrangements	469			65
Net proceeds from issuance of common stock	104,469			3,048
Net proceeds from issuance of common stock	18,383			16,881
Common stock dividends	(65,140		)	(62,916		)
Common stock dividends	(73,584		)	(71,966		)
Preferred stock dividends of subsidiaries	(946		)	(946		)
Preferred stock dividends of subsidiaries	(1,417		)	(1,417		)
Other	246			(228		)
Other	(4,033		)	(6,314		)
Net cash provided by financing activities	248,548			194,248
Net cash provided by financing activities	112,078			73,892
Net increase (decrease) in cash and cash equivalents	125,145			(31,659		)
Net decrease in cash and cash equivalents	(4,620		)	(101,753		)
Cash and cash equivalents, beginning of period	175,542			220,036
Cash and cash equivalents, beginning of period	219,662			270,265
Cash and cash equivalents, end of period	$	300,687		$	188,377
Cash and cash equivalents, end of period	$	215,042		$	168,512

The accompanying notes are an integral part of these consolidated financial statements.

Hawaiian Electric ~~Industries~~Company, Inc. and Subsidiaries

~~NOTES~~Consolidated TOStatements ~~CONSOLIDATED~~of ~~FINANCIAL~~Income ~~STATEMENTS~~(unaudited)

(Unaudited)



	Three months ended June 30						Six months ended June 30
(in thousands)	2015			2014			2015			2014
Revenues	$	558,163		$	738,429		$	1,131,605		$	1,458,491
Expenses
Fuel oil	146,231			270,257			323,037			556,557
Purchased power	149,284			188,323			285,291			353,239
Other operation and maintenance	98,864			98,564			202,866			187,170
Depreciation	44,241			41,593			88,484			83,196
Taxes, other than income taxes	53,382			69,624			108,130			137,595
Total expenses	492,002			668,361			1,007,808			1,317,757
Operating income	66,161			70,068			123,797			140,734
Allowance for equity funds used during construction	1,896			1,387			3,309			2,996
Interest expense and other charges, net	(16,288		)	(16,852		)	(32,613		)	(32,575		)
Allowance for borrowed funds used during construction	682			523			1,181			1,137
Income before income taxes	52,451			55,126			95,674			112,292
Income taxes	19,111			20,397			34,961			41,644
Net income	33,340			34,729			60,713			70,648
Preferred stock dividends of subsidiaries	229			229			458			458
Net income attributable to Hawaiian Electric	33,111			34,500			60,255			70,190
Preferred stock dividends of Hawaiian Electric	270			270			540			540
Net income for common stock	$	32,841		$	34,230		$	59,715		$	69,650

1HEI ·owns ~~Basis~~all of ~~presentation~~the common stock of Hawaiian Electric. Therefore, per share data with respect to shares of common stock of Hawaiian Electric are not meaningful.

The accompanying ~~unaudited~~notes ~~consolidated~~are ~~financial~~an ~~statements~~integral ~~have~~part ~~been prepared in conformity with U.S. generally accepted accounting principles (GAAP) for interim financial information, the instructions to SEC Form 10-Q and Article 10~~ of ~~Regulation S-X.~~these Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the balance sheet and the reported amounts of revenues and expenses for the period. Actual results could differ significantly from those estimates. The accompanying unaudited consolidated financial statements and the following notes should be read in conjunction with the audited consolidated financial statements and the notes thereto in HEI’s Form 10-K for the year ended December 31, 2012 and the unaudited consolidated financial statements and the notes thereto in HEI’s Quarterly Reports on SEC Form 10-Q for the quarters ended March 31, 2013 and June 30, 2013.

InHawaiian ~~the~~Electric ~~opinion of HEI’s management, the accompanying unaudited consolidated financial statements contain all material adjustments required by GAAP to fairly state the~~ Company~~’s financial position as of September 30~~, ~~2013 and December~~ ~~31,~~Inc. ~~2012, the results of its operations for the three~~ and nine months ended September 30, 2013 and 2012 and its cash flows for the nine months ended September 30, 2013 and 2012. All such adjustments are of a normal recurring nature, unless otherwise disclosed in this Form 10-Q or other referenced material. Results of operations for interim periods are not necessarily indicative of results for the full year. When required, certain reclassifications are made to the prior period’s consolidated financial statements to conform to the current presentation.Subsidiaries

Consolidated Statements of Comprehensive Income (Loss) (unaudited)



	Three months ended June 30						Six months ended June 30
(in thousands)	2015			2014			2015			2014
Net income for common stock	$	32,841		$	34,230		$	59,715		$	69,650
Other comprehensive income (loss), net of taxes:
Retirement benefit plans:
Less: amortization of prior service credit and net losses recognized during the period in net periodic benefit cost, net of tax benefits of $3,349, $1,647, $6,490 and $3,252 for the respective periods	5,257			2,588			10,190			5,107
Less: reclassification adjustment for impact of D&Os of the PUC included in regulatory assets, net of taxes of $3,359, $1,641, $6,486 and $3,239 for the respective periods	(5,272		)	(2,575		)	(10,183		)	(5,085		)
Other comprehensive income (loss), net of taxes	(15		)	13			7			22
Comprehensive income attributable to Hawaiian Electric Company, Inc.	$	32,826		$	34,243		$	59,722		$	69,672

The accompanying notes are an integral part of these consolidated financial statements.

2Hawaiian ·Electric ~~Segment~~Company, Inc. ~~financial~~and ~~information~~Subsidiaries

Consolidated Balance Sheets (unaudited)

(in thousands)	Electric utility			Bank			Other			Total
(dollars in thousands, except par value)	June 30, 2015			December 31, 2014
Three months ended September 30, 2013
Assets
Revenues from external customers	$	766,109		$	65,058		$	62		$	831,229
Property, plant and equipment
Intersegment revenues (eliminations)	6			—			(6		)	—
Utility property, plant and equipment
Revenues	766,115			65,058			56			831,229
Land	$	52,022		$	52,299
Income (loss) before income taxes	57,373			22,808			(8,633		)	71,548
Plant and equipment	6,142,229			6,009,482
Income taxes (benefit)	19,058			7,532			(3,749		)	22,841
Less accumulated depreciation	(2,218,703		)	(2,175,510		)
Net income (loss)	38,315			15,276			(4,884		)	48,707
Construction in progress	196,355			158,616
Preferred stock dividends of subsidiaries	498			—			(27		)	471
Utility property, plant and equipment, net	4,171,903			4,044,887
Net income (loss) for common stock	37,817			15,276			(4,857		)	48,236
Nonutility property, plant and equipment, less accumulated depreciation of $1,228 and $1,227 at respective dates	6,562			6,563
Nine months ended September 30, 2013
Total property, plant and equipment, net	4,178,465			4,051,450
Revenues from external customers	$	2,216,058		$	195,841		$	124		$	2,412,023
Current assets
Intersegment revenues (eliminations)	18			—			(18		)	—
Cash and cash equivalents	4,470			13,762
Revenues	2,216,076			195,841			106			2,412,023
Customer accounts receivable, net	139,922			158,484
Income (loss) before income taxes	144,212			69,265			(24,400		)	189,077
Accrued unbilled revenues, net	109,444			137,374
Income taxes (benefit)	51,777			23,915			(10,535		)	65,157
Other accounts receivable, net	5,890			4,283
Net income (loss)	92,435			45,350			(13,865		)	123,920
Fuel oil stock, at average cost	108,408			106,046
Preferred stock dividends of subsidiaries	1,496			—			(79		)	1,417
Materials and supplies, at average cost	57,355			57,250
Net income (loss) for common stock	90,939			45,350			(13,786		)	122,503
Prepayments and other	35,962			66,383
Assets (at September 30, 2013)	5,269,758			5,159,372			(118		)	10,429,012
Regulatory assets	99,236			71,421
Three months ended September 30, 2012
Total current assets	560,687			615,003
Revenues from external customers	$	801,089		$	66,596		$	35		$	867,720
Other long-term assets
Intersegment revenues (eliminations)	6			—			(6		)	—
Regulatory assets	805,323			833,843
Revenues	801,095			66,596			29			867,720
Unamortized debt expense	7,900			8,323
Income (loss) before income taxes	61,268			21,627			(8,914		)	73,981
Other	81,932			81,838
Income taxes (benefit)	22,395			7,419			(4,010		)	25,804
Total other long-term assets	895,155			924,004
Net income (loss)	38,873			14,208			(4,904		)	48,177
Total assets	$	5,634,307		$	5,590,457
Preferred stock dividends of subsidiaries	498			—			(27		)	471
Capitalization and liabilities
Net income (loss) for common stock	38,375			14,208			(4,877		)	47,706
Capitalization
Nine months ended September 30, 2012
Common stock ($6 2/3 par value, authorized 50,000,000 shares; outstanding 15,805,327 shares)	$	105,388		$	105,388
Revenues from external customers	$	2,340,202		$	196,569		$	77		$	2,536,848
Premium on capital stock	578,933			578,938
Intersegment revenues (eliminations)	55			—			(55		)	—
Retained earnings	1,012,285			997,773
Revenues	2,340,257			196,569			22			2,536,848
Accumulated other comprehensive income, net of income taxes-retirement benefit plans	52			45
Income (loss) before income taxes	154,976			66,964			(25,775		)	196,165
Common stock equity	1,696,658			1,682,144
Income taxes (benefit)	58,429			22,690			(11,193		)	69,926
Cumulative preferred stock — not subject to mandatory redemption	34,293			34,293
Net income (loss)	96,547			44,274			(14,582		)	126,239
Long-term debt, net	1,206,546			1,206,546
Preferred stock dividends of subsidiaries	1,496			—			(79		)	1,417
Total capitalization	2,937,497			2,922,983
Net income (loss) for common stock	95,051			44,274			(14,503		)	124,822
Commitments and contingencies (Note 4)
Assets (at December 31, 2012)	5,108,793			5,041,673			(1,334		)	10,149,132
Current liabilities
Short-term borrowings from non-affiliates	88,993			—
Accounts payable	147,750			163,934
Interest and preferred dividends payable	22,367			22,316
Taxes accrued	188,653			250,402
Regulatory liabilities	763			632
Other	66,385			65,146
Total current liabilities	514,911			502,430
Deferred credits and other liabilities
Deferred income taxes	605,702			602,872
Regulatory liabilities	356,326			344,217
Unamortized tax credits	83,893			79,492
Defined benefit pension and other postretirement benefit plans liability	578,637			595,395
Other	74,581			76,636
Total deferred credits and other liabilities	1,699,139			1,698,612
Contributions in aid of construction	482,760			466,432
Total capitalization and liabilities	$	5,634,307		$	5,590,457

~~Intercompany~~ The ~~electricity~~accompanying ~~sales~~notes ~~of the electric utilities to the bank and “other” segments~~ are ~~not~~an ~~eliminated~~integral ~~because~~part ~~those~~of ~~segments~~these ~~would need to purchase electricity from another source if it were not provided by~~ consolidated ~~Hawaiian~~financial ~~Electric, the profit on such sales is nominal and the elimination of electric sales revenues and expenses could distort segment operating income and net income for common stock~~statements.

Bank fees that ASB charges the electric utility and “other” segments are not eliminated because those segments would pay fees to another financial institution if they were to bank with another institution, the profit on such fees is nominal and the elimination of bank fee income and expenses could distort segment operating income and net income for common stock.

3 · Electric utility subsidiary

For consolidated Hawaiian Electric financial information, including its commitments and contingencies, see Hawaiian Electric’s consolidated financial statements beginning on page 33 through Note 10 on page 49.

4Hawaiian ·Electric ~~Bank~~Company, Inc. ~~subsidiary~~and Subsidiaries

~~Selected~~Consolidated ~~financial~~Statements ~~information~~of Changes in Common Stock Equity (unaudited)

American Savings Bank, F.S.B.



	Common stock			Premium on capital			Retained			Accumulated other comprehensive
(in thousands)	Shares	Amount		stock			earnings			income (loss)		Total
Balance, December 31, 2014	15,805	$	105,388	$	578,938		$	997,773		$	45	$	1,682,144
Net income for common stock	—	—		—			59,715			—		59,715
Other comprehensive income, net of taxes	—	—		—			—			7		7
Common stock dividends	—	—		—			(45,203		)	—		(45,203		)
Common stock issuance expenses	—	—		(5		)	—			—		(5		)
Balance, June 30, 2015	15,805	$	105,388	$	578,933		$	1,012,285		$	52	$	1,696,658
Balance, December 31, 2013	15,429	$	102,880	$	541,452		$	948,624		$	608	$	1,593,564
Net income for common stock	—	—		—			69,650			—		69,650
Other comprehensive income, net of taxes	—	—		—			—			22		22
Common stock dividends	—	—		—			(44,246		)	—		(44,246		)
Common stock issuance expenses	—	—		(3		)	—			—		(3		)
Balance, June 30, 2014	15,429	$	102,880	$	541,449		$	974,028		$	630	$	1,618,987

~~Statements~~The accompanying notes are an integral part of ~~Income~~these ~~Data~~consolidated financial statements.

	Three months ended September 30				Nine months ended September 30
(in thousands)	2013		2012		2013		2012
Interest and dividend income
Interest and fees on loans	$	43,337	$	43,880	$	129,564	$	133,241
Interest and dividend on investment and mortgage-related securities	3,025		3,432		9,723		10,534
Total interest and dividend income	46,362		47,312		139,287		143,775
Interest expense
Interest on deposit liabilities	1,262		1,540		3,870		5,015
Interest on other borrowings	1,206		1,201		3,548		3,676
Total interest expense	2,468		2,741		7,418		8,691
Net interest income	43,894		44,571		131,869		135,084
Provision for loan losses	54		3,580		953		9,504
Net interest income after provision for loan losses	43,840		40,991		130,916		125,580
Noninterest income
Fees from other financial services	5,728		7,674		21,367		22,474
Fee income on deposit liabilities	4,819		4,527		13,566		13,127
Fee income on other financial products	2,714		1,660		6,288		4,741
Mortgage banking income	1,547		4,077		6,896		8,297
Gain on sale of securities	—		—		1,226		134
Other income	3,888		1,346		7,211		4,021
Total noninterest income	18,696		19,284		56,554		52,794
Noninterest expense
Compensation and employee benefits	20,564		18,684		60,715		56,026
Occupancy	4,208		4,400		12,550		12,866
Data processing	2,168		2,644		7,982		7,244
Services	2,424		3,062		6,855		7,066
Equipment	1,825		1,762		5,469		5,299
Other expense	8,539		8,096		24,634		22,909
Total noninterest expense	39,728		38,648		118,205		111,410
Income before income taxes	22,808		21,627		69,265		66,964
Income taxes	7,532		7,419		23,915		22,690
Net income	$	15,276	$	14,208	$	45,350	$	44,274

~~American~~Hawaiian ~~Savings~~Electric ~~Bank~~Company, F Inc.~~S.B.~~ and Subsidiaries

Consolidated Statements of ~~Comprehensive~~Cash ~~Income~~Flows ~~Data~~(unaudited)

	Three months ended September 30						Nine months ended September 30
Six months ended June 30	2015			2014
(in thousands)	~~2013~~			~~2012~~			~~2013~~			~~2012~~
Net income	$	15,276		$	14,208		$	45,350		$	44,274
Cash flows from operating activities
Other comprehensive income (loss), net of taxes:
Net income	$	60,713		$	70,648
Net unrealized gains (losses) on securities:
Adjustments to reconcile net income to net cash provided by operating activities
Net unrealized gains (losses) on securities arising during the period, net of (taxes) benefits, of $1,049 and ($689) for the three months ended September 30, 2013 and 2012 and $7,081 and ($1,261) for the nine months ended September 30, 2013 and 2012, respectively	(1,589		)	1,043			(10,724		)	1,910
Depreciation of property, plant and equipment	88,484			83,196
Less: reclassification adjustment for net realized gains, included in net income, net of taxes, of nil for the three months ended September 30, 2013 and 2012 and $488 and $53 for the nine months ended September 30, 2013 and 2012, respectively	—			—			(738		)	(81		)
Other amortization	2,748			3,597
Retirement benefit plans:
Increase in deferred income taxes	33,320			45,386
Less: amortization of prior service credit and net losses recognized during the period in net periodic benefit cost, net of tax benefits of $278 and $176 for the three months ended September 30, 2013 and 2012 and $2,010 and $508 for the nine months ended September 30, 2013 and 2012, respectively	420			266			3,043			769
Change in tax credits, net	4,461			4,227
Other comprehensive income (loss), net of taxes	(1,169		)	1,309			(8,419		)	2,598
Allowance for equity funds used during construction	(3,309		)	(2,996		)
Comprehensive income	$	14,107		$	15,517		$	36,931		$	46,872
Change in cash overdraft	193			(1,038		)
Changes in assets and liabilities
Decrease (increase) in accounts receivable	16,955			(5,039		)
Decrease in accrued unbilled revenues	27,930			2,255
Increase in fuel oil stock	(2,362		)	(27,206		)
Increase in materials and supplies	(105		)	(1,835		)
Increase in regulatory assets	(19,976		)	(17,731		)
Decrease in accounts payable	(68,951		)	(63,306		)
Change in prepaid and accrued income taxes and revenue taxes	(63,613		)	(38,270		)
Increase (decrease) in defined benefit pension and other postretirement benefit plans liability	221			(498		)
Change in other assets and liabilities	(13,102		)	(26,258		)
Net cash provided by operating activities	63,607			25,132
Cash flows from investing activities
Capital expenditures	(134,563		)	(145,734		)
Contributions in aid of construction	19,089			13,209
Net cash used in investing activities	(115,474		)	(132,525		)
Cash flows from financing activities
Common stock dividends	(45,203		)	(44,246		)
Preferred stock dividends of Hawaiian Electric and subsidiaries	(998		)	(998		)
Net increase in short-term borrowings from non-affiliates and affiliate with original maturities of three months or less	88,993			102,989
Other	(217		)	(457		)
Net cash provided by financing activities	42,575			57,288
Net decrease in cash and cash equivalents	(9,292		)	(50,105		)
Cash and cash equivalents, beginning of period	13,762			62,825
Cash and cash equivalents, end of period	$	4,470		$	12,720

The accompanying notes are an integral part of these consolidated financial statements.

~~American~~NOTES ~~Savings~~TO ~~Bank,~~CONSOLIDATED ~~F.S.B.~~FINANCIAL STATEMENTS

~~Balance Sheets Data~~(Unaudited)

(in thousands)	September 30, 2013						December 31, 2012
Assets
Cash and cash equivalents				$	189,524					$	184,430
Available-for-sale investment and mortgage-related securities				535,264						671,358
Investment in stock of Federal Home Loan Bank of Seattle				93,413						96,022
Loans receivable held for investment				4,046,184						3,779,218
Allowance for loan losses				(41,052		)				(41,985		)
Loans receivable held for investment, net				4,005,132						3,737,233
Loans held for sale, at lower of cost or fair value				5,829						26,005
Other				248,020						244,435
Goodwill				82,190						82,190
Total assets				$	5,159,372					$	5,041,673
Liabilities and shareholder’s equity
Deposit liabilities—noninterest-bearing				$	1,205,526					$	1,164,308
Deposit liabilities—interest-bearing				3,105,316						3,065,608
Other borrowings				239,612						195,926
Other				102,172						117,752
Total liabilities				4,652,626						4,543,594
Commitments and contingencies (see “Litigation” below)
Common stock				335,448						333,712
Retained earnings				195,113						179,763
Accumulated other comprehensive income (loss), net of taxes
Net unrealized gains (losses) on securities	$	(701	)				$	10,761
Retirement benefit plans	(23,114		)	(23,815		)	(26,157		)	(15,396		)
Total shareholder’s equity				506,746						498,079
Total liabilities and shareholder’s equity				$	5,159,372					$	5,041,673
Other assets
Bank-owned life insurance				$	128,833					$	125,726
Premises and equipment, net				67,634						62,458
Prepaid expenses				4,394						13,199
Accrued interest receivable				13,372						13,228
Mortgage-servicing rights				11,806						10,818
Real estate acquired in settlement of loans, net				1,488						6,050
Other				20,493						12,956
				$	248,020					$	244,435
Other liabilities
Accrued expenses				$	20,463					$	17,103
Federal and state income taxes payable				30,249						35,408
Cashier’s checks				24,183						23,478
Advance payments by borrowers				5,694						9,685
Other				21,583						32,078
				$	102,172					$	117,752

1 · Basis of presentation

~~Bank-owned~~The ~~life~~accompanying ~~insurance~~unaudited isconsolidated ~~life~~financial ~~insurance~~statements ~~purchased~~have bybeen ~~ASB~~prepared onin conformity with accounting principles generally accepted in the ~~lives~~United States of ~~certain~~America ~~key~~(GAAP) ~~employees~~for interim financial information, ~~with~~the ~~ASB~~instructions asto SEC Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the ~~beneficiary~~information and footnotes required by GAAP for complete financial statements. ~~The~~In ~~insurance~~preparing the financial statements, management is ~~used~~required to ~~fund~~make ~~employee~~estimates ~~benefits~~and ~~through~~assumptions ~~tax-free~~that ~~income~~affect ~~from~~the ~~increases~~reported inamounts of assets and liabilities and disclosure of contingent assets and liabilities at the ~~cash~~date ~~value~~of the balance sheet and the reported amounts of revenues and expenses for the ~~policies~~period. Actual results could differ significantly from those estimates. The accompanying unaudited consolidated financial statements and ~~insurance~~the ~~proceeds~~following ~~paid~~notes toshould ~~ASB~~be ~~upon~~read anin ~~insured~~conjunction with the audited consolidated financial statements and the notes thereto in HEI’s ~~death~~and Hawaiian Electric’s Form 10-K for the year ended December 31, 2014.

In the opinion of HEI’s and Hawaiian Electric’s management, the accompanying unaudited consolidated financial statements contain all material adjustments required by GAAP to fairly state the Company’s and Hawaiian Electric’s financial position as of June 30, 2015 and December 31, 2014, the results of its operations for the three and six months ended June 30, 2015 and 2014, and its cash flows for the six months ended June 30, 2015 and 2014. All such adjustments are of a normal recurring nature, unless otherwise disclosed in this Form 10-Q or other referenced material. Results of operations for interim periods are not necessarily indicative of results for the full year.

Prior period financial statements reflect the retrospective application of Accounting Standards Update (ASU) No. 2014-01, “Investments-Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Qualified Affordable Housing Projects,” which was adopted as of January 1, 2015 and did not have a material impact on the Company’s financial condition or results of operations. See “Investments in qualified affordable housing projects” in Note 11.

2 · Proposed Merger

On December 3, 2014, HEI, NextEra Energy, Inc., a Florida corporation (NEE), NEE Acquisition Sub I, LLC, a Delaware limited liability company and a wholly owned subsidiary of NEE (Merger Sub II) and NEE Acquisition Sub II, Inc., a Delaware corporation and a wholly owned subsidiary of NEE (Merger Sub I), entered into an Agreement and Plan of Merger (the Merger Agreement). The Merger Agreement provides for Merger Sub I to merge with and into HEI (the Initial Merger), with HEI surviving, and then for HEI to merge with and into Merger Sub II, with Merger Sub II surviving as a wholly owned subsidiary of NEE (the Merger). The Merger is intended to qualify as a tax-free reorganization under the Internal Revenue Code of 1986, as amended, and be tax-free to HEI shareholders.

Pursuant to the Merger Agreement, upon the closing of the Merger, each issued and outstanding share of HEI common stock will automatically be converted into the right to receive 0.2413 shares of common stock of NEE (the Exchange Ratio). No adjustment to the Exchange Ratio is made in the Merger Agreement for any changes in the market prices of either HEI or NEE common stock between December 3, 2014 and the closing of the Merger.

The Merger Agreement contemplates that, immediately prior to the closing of the Merger, HEI will distribute to its shareholders all of the issued and outstanding shares of common stock of ASB Hawaii, the direct parent company of ASB (such distribution referred to as the Spin-Off), with ASB Hawaii becoming a new public company. In addition, the Merger Agreement contemplates that, immediately prior to the closing of the Merger, HEI will pay its shareholders a special dividend of $0.50 per share.

The closing of the Merger is subject to various conditions, including, among others, (i) the approval of holders of 75% of the outstanding shares of HEI common stock, (ii) effectiveness of the registration statement for the NEE common stock to be issued in the Initial Merger and the listing of such shares on the New York Stock Exchange, (iii) expiration or termination of the applicable Hart-Scott-Rodino Act waiting period, (iv) receipt of all required regulatory approvals from, among others, the Federal Energy Regulatory Commission (FERC), the Federal Communications Commission and the Hawaii Public Utilities Commission, (v) the absence of any law or judgment in effect or pending in which a governmental entity has imposed or is seeking to impose a legal restraint that would prevent or make illegal the closing of the Merger, (vi) the absence of any material adverse effect with respect to either HEI or NEE, (vii) subject to certain exceptions, the accuracy of the representations and warranties of, and compliance with covenants by, each of the parties to the Merger Agreement, (viii) receipt by each of HEI and NEE of a tax opinion of its counsel regarding the tax treatment of the transactions contemplated by the Merger Agreement, (ix) effectiveness of the ASB Hawaii registration statement necessary to consummate the Spin-Off, and (x) the determination by each of HEI and NEE that, upon completion of the Spin-Off, HEI will no longer be a savings and loan holding company or be deemed to control ASB for purposes of the Home Owners' Loan Act. The Spin-Off will be subject to various conditions, including, among others, the approval of the Federal Reserve Board (FRB).

~~Other~~The ~~borrowings~~Merger ~~consisted~~Agreement ofcontains ~~securities~~customary ~~sold~~representations, ~~under~~warranties ~~agreements to repurchase~~ and ~~advances~~covenants ~~from the Federal Home Loan Bank (FHLB)~~ of ~~Seattle~~HEI ~~of $140 million~~ and ~~$100 million, respectively, as of September 30, 2013 and $146 million and $50 million, respectively, as of December 31, 2012~~NEE.

~~Securities~~HEI ~~sold~~is ~~under~~also ~~agreements~~subject to ~~repurchase~~a ~~are~~“no ~~accounted~~shop” ~~for~~restriction asthat ~~financing~~limits ~~transactions~~its ~~and~~ability ~~the obligations~~ to ~~repurchase~~solicit ~~these~~alternative ~~securities~~acquisition ~~are recorded as liabilities in the balance sheet. All such agreements are subject to master netting arrangements~~proposals, ~~which~~ provide ~~for~~information ~~conditional~~or ~~right~~engage ~~of set-off~~ in ~~case~~discussion ofwith ~~default~~third ~~by either party; however~~parties, ~~ASB~~except ~~presents securities sold~~ under ~~agreements~~limited circumstances to ~~repurchase~~permit onHEI’s aboard ~~gross~~of ~~basis~~directors ~~in the balance sheet. The following tables present information about the securities sold under agreements~~ to ~~repurchase,~~comply ~~including~~with ~~the~~its ~~related~~fiduciary ~~collateral received from or pledged to counterparties:~~duties.

(in millions)	Gross amount ofrecognized liabilities		Gross amount offset inthe Balance Sheet		Net amount of liabilities presentedin the Balance Sheet
Repurchase agreements
September 30, 2013	$	140	$	—	$	140
December 31, 2012	146		—		146

The Merger Agreement contains certain termination rights for both HEI and NEE, including the right of either party to terminate the Merger Agreement if the Merger has not been consummated by December 3, 2015 (subject to a 6-month extension if required to obtain necessary regulatory approvals), and further provides that upon termination of the Merger Agreement under specified circumstances, HEI or NEE, as the case may be, would be required to pay the other party a termination fee of $90 million and reimburse the other party for up to $5 million of its documented out-of-pocket expenses incurred in connection with the Merger Agreement.

	Gross amount not offset in the Balance Sheet
(in millions)	Net amount of liabilities presentedin the Balance Sheet		Financialinstruments		Cashcollateralpledged		Net amount
September 30, 2013
Financial institution	$	50	$	50	$	—	$	—
Commercial account holders	90		90		—		—
Total	$	140	$	140	$	—	$	—
December 31, 2012
Financial institution	$	50	$	50	$	—	$	—
Commercial account holders	96		96		—		—
Total	$	146	$	146	$	—	$	—

On March 26, 2015, NEE’s Form S-4, which registers NEE common stock expected to be issued in the Initial Merger, was declared effective. Also on March 26, 2015, HEI filed its special meeting proxy statement for the vote on the merger proposal and related matters, which meeting was scheduled for May 12, 2015. On May 12, 2015, HEI shareholders approved a proposal to adjourn the special meeting of the shareholders to extend the deadline for shareholder voting on the proposed merger agreement with NEE. Thus, the special meeting was adjourned on May 12, 2015 and reconvened on June 10, 2015. Shareholders approved the proposed merger agreement with NextEra Energy on June 10, 2015.

~~Investment~~On ~~and~~March ~~mortgage-related~~30, ~~securities~~2015, ~~portfolio~~ASB Hawaii filed its Form 10, the registration statement for ASB Hawaii shares expected to be distributed in the Spin-Off.

~~Available-for-sale~~On ~~securities. The~~August ~~book~~7, ~~value (amortized cost)~~2015, ~~gross~~each ~~unrealized~~of ~~gains~~HEI and ~~losses,~~NEE ~~estimated~~filed ~~fair~~their ~~value~~respective ~~and~~notifications ~~gross~~pursuant ~~unrealized~~to ~~losses~~the ~~(fair~~Hart-Scott-Rodino ~~value~~Antitrust ~~and~~Improvements ~~amount~~Act ~~by duration~~ of ~~time~~1976, inas ~~which~~amended, ~~positions~~with ~~have~~the ~~been~~U.S. ~~held~~Department inof aJustice ~~continuous~~and ~~loss~~Federal ~~position)~~Trade ~~for~~Commission. ~~securities~~The ~~held~~filings ininitiated ~~ASB’s~~a ~~“available~~30-~~for-sale”~~day ~~portfolio~~waiting byperiod, ~~major~~which ~~security~~is ~~type~~scheduled ~~were~~to asexpire ~~follows:~~on September 8, 2015.

PUC application. In January 2015, NEE and Hawaiian Electric filed an application with the PUC requesting approval of the proposed Merger of Hawaiian Electric. The application also requests modification of certain conditions agreed to by HEI and the PUC in 1982 for the merger and corporate restructuring of Hawaiian Electric, and confirmation that with approval of the Merger Agreement, the recommendations in the 1995 Dennis Thomas Report (resulting from a proceeding to review the relationship between HEI and Hawaiian Electric and any impact of HEI’s then diversified activities on the Utilities) will no longer be applicable. The application includes a commitment that, for at least four years following the completion of the transaction, Hawaiian Electric will not submit any applications seeking a general base rate increase and will forego recovery of the incremental operations and maintenance rate adjustment under decoupling during that period, which amounts to approximately $60 million in cumulative savings for customers, subject to certain exceptions and conditions, including that the following remain in effect: the RBA tariff provisions, the Rate Base RAM, the Renewable Energy Infrastructure Program, and Renewable Energy Infrastructure Surcharge, the IRP/DSM Recovery tariff provisions, the energy cost adjustment clause (ECAC) tariff provisions, the PPA tariff provision and the Pension and OPEB tracker mechanism. Various parties, including governmental, environmental and commercial interests, have been allowed to intervene in the proceeding.

Twenty-eight interveners filed testimonies in the docket in July 2015. Eleven interveners recommended the merger not be approved, eleven recommended approval only with conditions, and six did not specifically make a recommendation either way. The Consumer Advocate is scheduled to file its testimonies on August 10, 2015, and the applicants are scheduled to file their responsive testimonies on August 31, 2015. Evidentiary hearings are scheduled from November 30 to December 16, 2015.

Other requests. On January 29, 2015, HEI submitted its application to the FERC requesting all necessary authorization to consummate the transactions contemplated by the Merger Agreement. The FERC issued its order authorizing the proposed merger on March 27, 2015.

On February 1, 2015, HEI submitted a letter to the FRB requesting deregistration as a Savings & Loan Holding Company (SLHC).

Pending litigation and other matters.

Litigation. HEI and its subsidiaries are subject to various legal proceedings that arise from time to time. Some of these proceedings may seek relief or damages in amounts that may be substantial. Because these proceedings are complex, many years may pass before they are resolved, and it is not feasible to predict their outcomes. Some of these proceedings involve claims HEI and Hawaiian Electric believe may be covered by insurance, and HEI and Hawaiian Electric have advised their insurance carriers accordingly.

Since the December 3, 2014 announcement of the merger agreement, eight purported class action complaints were filed in the Circuit Court of the First Circuit for the State of Hawaii by alleged stockholders of HEI against HEI, Hawaiian Electric (in

	Amortized cost		Gross unrealized gains		Gross unrealized losses			Estimated fair value		Gross unrealized losses
										Less than 12 months					12 months or longer
(in thousands)										Fair value		Amount			Fair value		Amount
September 30, 2013
Federal agency obligations	$	99,812	$	389	$	(1,936	)	$	98,265	$	29,755	$	(1,936	)	$	—	$	—
Mortgage-related securities- FNMA, FHLMC and GNMA	359,437		6,308		(7,768		)	357,977		164,998		(7,620		)	3,910		(148		)
Municipal bonds	77,181		2,034		(193		)	79,022		26,526		(193		)	—		—
	$	536,430	$	8,731	$	(9,897	)	$	535,264	$	221,279	$	(9,749	)	$	3,910	$	(148	)
December 31, 2012
Federal agency obligations	$	168,324	$	3,167	$	—		$	171,491	$	—	$	—		$	—	$	—
Mortgage-related securities- FNMA, FHLMC and GNMA	407,175		10,412		(204		)	417,383		32,269		(204		)	—		—
Municipal bonds	77,993		4,491		—			82,484		—		—			—		—
	$	653,492	$	18,070	$	(204	)	$	671,358	$	32,269	$	(204	)	$	—	$	—

one complaint), the individual directors of HEI, NEE and NEE's acquisition subsidiaries. The lawsuits are captioned as follows: Miller v. Hawaiian Electric Industries, Inc., et al., Case No. 14-1-2531-12 KTN (December 15, 2014) (the Miller Action); Walsh v. Hawaiian Electric Industries, Inc., et al., Case No. 14-1-2541-12 JHC (December 15, 2014) (the Walsh Action); Stein v. Hawaiian Electric Industries, Inc., et al., Case No. 14-1-2555-12 KTN (December 17, 2014) (the Stein Action); Brown v. Hawaiian Electric Industries, Inc., et al., Case No. 14-1-2643-12 RAN (December 30, 2014) (the Brown Action); Cohn v. Hawaiian Electric Industries, Inc., et al., Case No. 14-1-2642-12 KTN (December 30, 2014) (the Cohn State Action); Guenther v. Watanabe, et al., Case No. 15-1-003-01 ECN (January 2, 2015) (the Guenther Action); Hudson v. Hawaiian Electric Industries, Inc., et al., Case No. 15-1-0013-01 JHC (January 5, 2015) (the Hudson Action); Grieco v. Hawaiian Electric Industries, Inc., et al., Case No. 15-1-0094-01 KKS (January 21, 2015) (the Grieco Action). On January 12, 2015, plaintiffs in the Miller Action, the Walsh Action, the Stein Action, the Brown Action, the Guenther Action, and the Hudson Action filed a motion to consolidate their actions and to appoint co-lead counsel. The Court held a hearing on this motion on February 13, 2015 and granted consolidation and appointment of co-lead counsel on March 6, 2015. On March 10, 2015, plaintiffs in the consolidated state action filed an amended complaint, and added J.P. Morgan Securities, LLC (JP Morgan), which was HEI’s financial advisor for the Merger, as a defendant. On March 17, 2015, plaintiffs in the consolidated state action moved for limited expedited discovery. After limited discovery, the parties in the consolidated state action stipulated and the Court ordered that the deadline for defendants to respond to the amended complaint is extended indefinitely. On April 30, 2015, the Court consolidated the seven state actions under the caption, In re Consolidated HEI Shareholder Cases. On January 23, 2015, the Cohn State Action was voluntarily dismissed. Thereafter, the same alleged stockholder plaintiff filed a purported class action complaint in the United States District Court for the District of Hawaii against HEI, the individual directors of HEI, NEE and NEE's acquisition subsidiaries. The lawsuit is captioned as Cohn v. Hawaiian Electric Industries, Inc. et al., 15-cv-00029-JMS-KSC (January 27, 2015) (the Cohn Federal Action).

The ~~unrealized~~actions ~~losses~~allege, onamong ~~ASB’~~other things, that members of HEI's ~~investments~~Board breached their fiduciary duties in ~~mortgage-related~~connection ~~securities~~with the proposed transaction, and ~~obligations~~that ~~issued~~the byMerger ~~federal~~Agreement ~~agencies~~involves ~~were~~an ~~caused~~unfair byprice, ~~interest~~was ~~rate~~the ~~movements~~product of an inadequate sales process, and contains unreasonable deal protection devices that purportedly preclude competing offers. The ~~contractual~~complaints ~~terms~~further allege that HEI, NEE and/or its acquisition subsidiaries aided and abetted the purported breaches of fiduciary duty. The plaintiffs in these ~~investments~~lawsuits doseek, ~~not~~among ~~permit~~other ~~the~~things, ~~issuer~~(i) toa ~~settle~~declaration that the ~~securities~~Merger atAgreement awas ~~price~~entered ~~less~~into ~~than~~in breach of HEI's directors' fiduciary duties, (ii) an injunction enjoining the ~~amortized~~HEI ~~cost~~Board ~~basis~~from ofconsummating the ~~investments.~~Merger, ~~Because~~(iii) ~~ASB~~an ~~does~~order ~~not~~directing ~~intend~~the HEI Board to ~~sell~~exercise ~~the~~their ~~securities~~duties ~~and~~to ~~has~~obtain ~~determined~~a ittransaction which is ~~more~~in ~~likely~~the ~~than~~best ~~not~~interests of HEI's stockholders, (iv) a rescission of the Merger to the extent that it ~~will~~is ~~not~~consummated, beand/or ~~required~~(v) todamages ~~sell~~suffered as a result of the ~~investments~~defendants' ~~before~~alleged ~~recovery~~actions. Plaintiffs in the consolidated state action also allege that JP Morgan had a conflict of ~~their~~interest ~~amortized~~in ~~costs~~advising ~~basis,~~HEI ~~which~~because ~~may~~JP beMorgan atand ~~maturity,~~its ~~ASB~~affiliates ~~did~~had ~~not~~business ~~consider~~ties ~~these~~to and investments toin beNEE. ~~other-than-temporarily~~The ~~impaired~~consolidated atstate ~~September 30~~action also alleges that the HEI board of directors violated its fiduciary duties by omitting material facts from the Registration Statement on Form S-4. In addition, ~~2013~~the Cohn Federal Action alleges that the HEI board of directors violated its fiduciary duties and federal securities laws by omitting material facts from the Registration Statement on Form S-4.

~~The~~HEI ~~fair~~and ~~values~~Hawaiian Electric believe the allegations of ~~ASB’s~~the ~~investment~~complaints ~~securities~~are ~~could~~without ~~decline~~merit ifand ~~interest~~intend ~~rates~~to ~~rise~~defend orthese ~~spreads~~lawsuits ~~widen~~vigorously.

The following table details the contractual maturities of available-for-sale securities. All positions with variable maturities (e.g. callable debentures and mortgage-related securities) are disclosed based upon the bond’s contractual maturity. Actual maturities will likely differ from these contractual maturities because borrowers have the right to prepay obligations with or without prepayment penalties.

September 30, 2013	Amortized cost		Fair value
(in thousands)
Due in one year or less	$	28,120	$	28,143
Due after one year through five years	37,922		38,324
Due after five years through ten years	85,760		87,192
Due after ten years	25,191		23,628
	176,993		177,287
Mortgage-related securities-FNMA,FHLMC and GNMA	359,437		357,977
Total available-for-sale securities	$	536,430	$	535,264

Allowance for loan losses. ASB must maintain an allowance for loan losses that is adequate to absorb estimated probable credit losses associated with its loan portfolio. The allowance for loan losses consists of an allocated portion, which estimates credit losses for specifically identified loans and pools of loans, and an unallocated portion.

~~The~~3 ~~allowance~~· ~~for~~Segment ~~loan~~financial ~~losses (balances and changes) and financing receivables were as follows:~~information

(in thousands)	~~Residential~~Electric ~~1-4 family~~utility			~~Commercial real estate~~Bank		~~Homeequity line of credit~~Other			~~Residential land~~Total			~~Commercial construction~~			~~Residential construction~~		~~Commercial loans~~			~~Consumer loans~~			~~Unallocated~~		~~Total~~
Three months ended September 30, 2013
Three months ended June 30, 2015
Allowance for loan losses:
Revenues from external customers	$	558,156		$	65,783	$	(27	)	$	623,912
Beginning balance	$	6,357		$	4,117	$	5,009		$	2,187		$	2,305		$	14	$	16,307		$	2,399		$	2,309	$	41,004
Intersegment revenues (eliminations)	7			—		(7		)	—
Charge-offs	(106		)	—		(44		)	(3		)	—			—		(305		)	(407		)	—		(865		)
Revenues	558,163			65,783		(34		)	623,912
Recoveries	157			—		78			282			—			—		166			176			—		859
Income (loss) before income taxes	52,451			19,726		(15,775		)	56,402
Provision	(604		)	204		12			(361		)	44			2		(361		)	42			1,076		54
Income taxes (benefit)	19,111			6,875		(5,075		)	20,911
Ending balance	$	5,804		$	4,321	$	5,055		$	2,105		$	2,349		$	16	$	15,807		$	2,210		$	3,385	$	41,052
Net income (loss)	33,340			12,851		(10,700		)	35,491
Three months ended September 30, 2012
Preferred stock dividends of subsidiaries	499			—		(26		)	473
Allowance for loan losses:
Net income (loss) for common stock	32,841			12,851		(10,674		)	35,018
Beginning balance	$	7,212		$	2,078	$	4,843		$	3,340		$	2,255		$	3	$	13,961		$	3,797		$	1,974	$	39,463
Six months ended June 30, 2015
Charge-offs	(964		)	—		(363		)	(1,093		)	—			—		(1,130		)	(601		)	—		(4,151		)
Revenues from external customers	$	1,131,587		$	130,131	$	56		$	1,261,774
Recoveries	379			—		7			226			—			—		155			151			—		918
Intersegment revenues (eliminations)	18			—		(18		)	—
Provision	100			4		378			1,324			(324		)	5		1,344			462			287		3,580
Revenues	1,131,605			130,131		38			1,261,774
Ending balance	$	6,727		$	2,082	$	4,865		$	3,797		$	1,931		$	8	$	14,330		$	3,809		$	2,261	$	39,810
Income (loss) before income taxes	95,674			40,357		(27,311		)	108,720
Nine months ended September 30, 2013
Income taxes (benefit)	34,961			14,031		(8,102		)	40,890
Allowance for loan losses:
Net income (loss)	60,713			26,326		(19,209		)	67,830
Beginning balance	$	6,068		$	2,965	$	4,493		$	4,275		$	2,023		$	9	$	15,931		$	4,019		$	2,202	$	41,985
Preferred stock dividends of subsidiaries	998			—		(52		)	946
Charge-offs	(1,162		)	—		(782		)	(238		)	—			—		(1,655		)	(1,811		)	—		(5,648		)
Net income (loss) for common stock	59,715			26,326		(19,157		)	66,884
Recoveries	1,382			—		334			782			—			—		778			486			—		3,762
Assets (at June 30, 2015)	5,634,307			5,777,098		28,226			11,439,631
Provision	(484		)	1,356		1,010			(2,714		)	326			7		753			(484		)	1,183		953
Three months ended June 30, 2014
Ending balance	$	5,804		$	4,321	$	5,055		$	2,105		$	2,349		$	16	$	15,807		$	2,210		$	3,385	$	41,052
Revenues from external customers	$	738,423		$	60,616	$	(382	)	$	798,657
Ending balance: individually evaluated for impairment	$	944		$	888	$	—		$	1,585		$	—		$	—	$	2,679		$	—		$	—	$	6,096
Intersegment revenues (eliminations)	6			—		(6		)	—
Ending balance: collectively evaluated for impairment	$	4,860		$	3,433	$	5,055		$	520		$	2,349		$	16	$	13,128		$	2,210		$	3,385	$	34,956
Revenues	738,429			60,616		(388		)	798,657
Financing Receivables:
Income (loss) before income taxes	55,126			17,956		(8,011		)	65,071
Ending balance	$	2,015,082		$	405,037	$	703,210		$	18,400		$	51,067		$	10,460	$	749,733		$	102,400		$	—	$	4,055,389
Income taxes (benefit)	20,397			6,420		(3,500		)	23,317
Ending balance: individually evaluated for impairment	$	22,123		$	4,484	$	960		$	12,747		$	—		$	—	$	22,777		$	19		$	—	$	63,110
Net income (loss)	34,729			11,536		(4,511		)	41,754
Ending balance: collectively evaluated for impairment	$	1,992,959		$	400,553	$	702,250		$	5,653		$	51,067		$	10,460	$	726,956		$	102,381		$	—	$	3,992,279
Preferred stock dividends of subsidiaries	499			—		(26		)	473
Nine months ended September 30, 2012
Net income (loss) for common stock	34,230			11,536		(4,485		)	41,281
Allowance for loan losses:
Six months ended June 30, 2014
Beginning balance	$	6,500		$	1,688	$	4,354		$	3,795		$	1,888		$	4	$	14,867		$	3,806		$	1,004	$	37,906
Revenues from external customers	$	1,458,479		$	124,235	$	(308	)	$	1,582,406
Charge-offs	(2,476		)	—		(402		)	(2,340		)	—			—		(2,964		)	(1,853		)	—		(10,035		)
Intersegment revenues (eliminations)	12			—		(12		)	—
Recoveries	974			—		95			471			—			—		511			384			—		2,435
Revenues	1,458,491			124,235		(320		)	1,582,406
Provision	1,729			394		818			1,871			43			4		1,916			1,472			1,257		9,504
Income (loss) before income taxes	112,292			40,488		(15,728		)	137,052
Ending balance	$	6,727		$	2,082	$	4,865		$	3,797		$	1,931		$	8	$	14,330		$	3,809		$	2,261	$	39,810
Income taxes (benefit)	41,644			14,553		(7,159		)	49,038
Ending balance: individually evaluated for impairment	$	324		$	7	$	313		$	2,321		$	—		$	—	$	1,656		$	—		$	—	$	4,621
Net income (loss)	70,648			25,935		(8,569		)	88,014
Ending balance: collectively evaluated for impairment	$	6,403		$	2,075	$	4,552		$	1,476		$	1,931		$	8	$	12,674		$	3,809		$	2,261	$	35,189
Preferred stock dividends of subsidiaries	998			—		(52		)	946
Financing Receivables:																									0
Net income (loss) for common stock	69,650			25,935		(8,517		)	87,068
Ending balance	$	1,899,580		$	367,765	$	604,279		$	29,280		$	42,913		$	5,648	$	704,100		$	104,338		$	—	$	3,757,903
Assets (at December 31, 2014)	5,590,457			5,566,222		28,463			11,185,142
Ending balance: individually evaluated for impairment	$	26,912		$	2,929	$	1,913		$	25,146		$	—		$	—	$	17,956		$	22		$	—	$	74,878
Ending balance: collectively evaluated for impairment	$	1,872,668		$	364,836	$	602,366		$	4,134		$	42,913		$	5,648	$	686,144		$	104,316		$	—	$	3,683,025

~~The~~Intercompany ~~reversal~~electricity sales of ~~provision~~the ~~for~~Utilities ~~loan~~to ~~losses for~~ the ~~1-4~~bank ~~family, residential land~~ and ~~commercial~~“other” ~~loan~~segments ~~portfolios~~are innot ~~the~~eliminated ~~third~~because ~~quarter~~those ofsegments ~~2013~~would ~~was~~need ~~due~~ to ~~lower~~purchase ~~loss~~electricity ~~rates~~from asanother asource ~~result~~if ofit ~~improving~~were ~~charge-off~~not ~~and~~provided ~~credit~~by ~~trends, as well as declining balances in~~ the ~~higher~~Utilities, ~~risk purchased mortgage and land loan portfolios. The increase in~~ the ~~unallocated~~profit ~~allowance~~on ~~for~~such ~~loan~~sales ~~losses~~is innominal ~~the~~and ~~third quarter of 2013 was primarily due to uncertainty over~~ the ~~impact~~elimination of ~~the~~electric ~~possible~~sales ~~U.S.~~revenues ~~debt default~~ and ~~the~~expenses ~~federal government shutdown in the first half of October 2013 that~~ could ~~affect~~distort ~~the~~segment ~~credit~~operating ~~quality~~income ~~of the loan portfolios as individuals~~ and ~~businesses~~net ~~struggling~~income ~~with~~for ~~loan~~common ~~payments are pushed into delinquency or default~~stock.

Bank fees that ASB charges the Utilities and “other” segments are not eliminated because those segments would pay fees to another financial institution if they were to bank with another institution, the profit on such fees is nominal and the elimination of bank fee income and expenses could distort segment operating income and net income for common stock.

~~Credit~~4 ~~quality. ASB~~· ~~performs~~Electric anutility internal loan review and grading on an ongoing basis. The review provides management with periodic information as to the quality of the loan portfolio and effectiveness of its lending policies and procedures. The objectives of the loan review and grading procedures are to identify, in a timely manner, existing or emerging credit trends so that appropriate steps can be initiated to manage risk and avoid or minimize future losses. Loans subject to grading include commercial and industrial, commercial real estate and commercial construction loans.segment

ARevenue ~~dual~~taxes. The ~~ten-point~~Utilities’ ~~risk~~revenues ~~rating~~include ~~system~~amounts isfor ~~used~~the torecovery ~~reflect~~of ~~the~~various ~~probability~~Hawaii ofstate ~~default~~revenue ~~(borrower~~taxes. ~~risk~~Revenue ~~rating)~~taxes ~~and~~are ~~loss~~generally ~~given~~recorded ~~default~~as ~~(transaction~~an ~~risk~~expense ~~rating).~~in ~~The~~the ~~borrower~~period ~~risk~~the ~~rating~~related ~~addresses~~revenues ~~risk~~are ~~presented~~recognized. byHowever, the ~~individual~~Utilities’ ~~borrower~~revenue ~~and~~tax ispayments ~~based~~to onthe taxing authorities in the ~~overall~~period ~~assessment~~are ofbased on the ~~borrower~~prior year’s ~~financial~~billed ~~and~~revenues ~~operating~~(in ~~strength~~the ~~including~~case ~~earnings,~~of ~~operating~~public ~~cash~~service ~~flow,~~company ~~debt~~taxes ~~service~~and ~~capacity,~~PUC ~~asset~~fees) ~~and~~or ~~liability~~on ~~structure,~~the ~~competitive~~current ~~issues,~~year’s ~~experience~~cash ~~and~~collections ~~quality~~from ofelectric ~~management,~~sales ~~financial~~(in ~~reporting~~the ~~quality~~case ~~and~~of ~~industry/economic~~franchise ~~factors~~taxes). ~~Separately,~~The ~~the~~Utilities ~~transaction~~included ~~risk~~in ~~rating~~the ~~addresses~~second ~~risk~~quarters inof ~~the~~2015 ~~transaction~~and 2014 and isthe asix ~~function~~months ofended ~~the~~June 30, ~~type~~2015 ofand ~~collateral~~2014 ~~control~~approximately ~~exercised~~$50 ~~over~~million, ~~the~~$64 ~~collateral~~million, ~~loan~~$101 ~~structure~~million and $129 million, ~~guarantees~~respectively, ~~and~~of ~~other~~revenue ~~structural~~taxes ~~support~~in or“revenues” ~~enhancements~~and toin ~~the~~“taxes, ~~loan~~other than income taxes” expense.

Recent tax developments. The ~~numerical~~Utilities ~~representation~~adopted the safe harbor guidelines with respect to network assets in 2011 and, in June 2013, the IRS released a revenue procedure relating to deductions for repairs of generation property, which provides some guidance (that is elective) for taxpayers that own steam or electric generation property. This guidance defines the ~~risk~~relevant ~~categories~~components ~~are:~~of generation property to be used in determining whether such component expenditures should be deducted as repairs or capitalized and depreciated by taxpayers. The revenue procedure also provides an extrapolation methodology that could be used by taxpayers in determining deductions for prior years’ repairs without going back to the specific documentation of those years. The guidance does not provide specific methods for determining the repairs amount. Management intends to adopt a method consistent with this guidance in its 2014 tax return.

	1- Substantially risk free	6- Acceptable risk
	2- Minimal risk	7- Special mention
	3- Modest risk	8- Substandard
	4- Better than average risk	9- Doubtful
	5- Average risk	10- Loss

Unconsolidated variable interest entities.

~~Grades~~HECO 1Capital ~~through~~Trust III. HECO Capital Trust III (Trust III) was created and exists for the exclusive purposes of (i) issuing in March 2004 2,000,000 6.50% Cumulative Quarterly Income Preferred Securities, Series 2004 (2004 Trust Preferred Securities) ($50 million aggregate liquidation preference) to the public and trust common securities ($1.5 million aggregate liquidation preference) to Hawaiian Electric, (ii) investing the proceeds of these trust securities in 2004 Debentures issued by Hawaiian Electric in the principal amount of $31.5 million and issued by Hawaii Electric Light and Maui Electric each in the principal amount of $10 million, (iii) making distributions on these trust securities and (iv) engaging in only those other activities necessary or incidental thereto. The 2004 Trust Preferred Securities are ~~considered~~mandatorily ~~pass~~redeemable ~~grades~~at the maturity of the underlying debt on March 18, 2034, which maturity may be extended to no later than March 18, 2053; and are currently redeemable at the issuer’s option without premium. ~~Pass~~The ~~exposures~~2004 ~~generally~~Debentures, together with the obligations of the Utilities under an expense agreement and Hawaiian Electric’s obligations under its trust guarantee and its guarantee of the obligations of Hawaii Electric Light and Maui Electric under their respective debentures, are ~~well~~the ~~protected~~sole byassets of Trust III. Taken together, Hawaiian Electric’s obligations under the ~~current~~Hawaiian ~~net~~Electric ~~worth~~debentures, the Hawaiian Electric indenture, the subsidiary guarantees, the trust agreement, the expense agreement and ~~paying~~trust ~~capacity~~guarantee provide, in the aggregate, a full, irrevocable and unconditional guarantee of payments of amounts due on the ~~obligor~~Trust orPreferred Securities. Trust III has at all times been an unconsolidated subsidiary of Hawaiian Electric. Since Hawaiian Electric, as the holder of 100% of the trust common securities, does not absorb the majority of the variability of Trust III, Hawaiian Electric is not the primary beneficiary and does not consolidate Trust III in accordance with accounting rules on the consolidation of VIEs. Trust III’s balance sheets as of June 30, 2015 and December 31, 2014 each consisted of $51.5 million of 2004 Debentures; $50.0 million of 2004 Trust Preferred Securities; and $1.5 million of trust common securities. Trust III’s income statements for the six months ended June 30, 2015 and 2014 each consisted of $1.7 million of interest income received from the 2004 Debentures; $1.6 million of distributions to holders of the Trust Preferred Securities; and $50,000 of common dividends on the trust common securities to Hawaiian Electric. As long as the 2004 Trust Preferred Securities are outstanding, Hawaiian Electric is not entitled to receive any funds from Trust III other than pro-rata distributions, subject to certain subordination provisions, on the trust common securities. In the event of a default by Hawaiian Electric in the ~~value~~performance of its obligations under the ~~asset~~2004 Debentures or ~~underlying~~under ~~collateral~~its Guarantees, or in the event any of the Utilities elect to defer payment of interest on any of their respective 2004 Debentures, then Hawaiian Electric will be subject to a number of restrictions, including a prohibition on the payment of dividends on its common stock.

~~The~~Power ~~credit~~purchase ~~risk~~agreements. As ~~profile~~of byJune 30, ~~internally~~2015, ~~assigned~~the ~~grade~~Utilities had six purchase power agreements (PPAs) for ~~loans~~firm ~~was~~capacity and other PPAs with smaller IPPs and Schedule Q providers (i.e., customers with cogeneration and/or small power production facilities with a capacity of 100 kilowatts (kWs) or less who buy power from or sell power to the Utilities), none of which are currently required to be consolidated as VIEs. Approximately 90% of the firm capacity is purchased from AES Hawaii, Inc. (AES Hawaii), Kalaeloa Partners, L.P. (Kalaeloa), Hamakua Energy Partners, L.P. (HEP) and HPOWER. Purchases from all IPPs were as follows:

	September 30, 2013						December 31, 2012
(in thousands)	Commercialreal estate		Commercialconstruction		Commercial		Commercialreal estate		Commercialconstruction		Commercial
Grade:
Pass	$	332,407	$	51,067	$	661,720	$	314,182	$	39,063	$	638,854
Special mention	40,437		—		18,948		25,437		4,925		24,511
Substandard	28,403		—		65,571		29,308		—		53,538
Doubtful	3,790		—		3,494		6,750		—		4,446
Loss	—		—		—		—		—		—
Total	$	405,037	$	51,067	$	749,733	$	375,677	$	43,988	$	721,349

The credit risk profile based on payment activity for loans was as follows:



	Three months ended June 30				Six months ended June 30
(in millions)	2015		2014		2015		2014
AES Hawaii	$	26	$	36	$	60	$	69
Kalaeloa	48		74		92		141
HEP	10		8		21		20
HPOWER	16		16		32		32
Other IPPs	49		54		80		91
Total IPPs	$	149	$	188	$	285	$	353

(in thousands)	30-59dayspast due		60-89dayspast due		Greaterthan90 days		Totalpast due		Current		Totalfinancingreceivables		Recordedinvestment>90 days andaccruing
September 30, 2013
Real estate loans:
Residential 1-4 family	$	3,026	$	1,599	$	15,060	$	19,685	$	1,995,397	$	2,015,082	$	—
Commercial real estate	—		—		3,790		3,790		401,247		405,037		—
Home equity line of credit	658		373		880		1,911		701,299		703,210		—
Residential land	684		80		5,352		6,116		12,284		18,400		1,746
Commercial construction	—		—		—		—		51,067		51,067		—
Residential construction	—		—		—		—		10,460		10,460		—
Commercial loans	1,026		166		4,105		5,297		744,436		749,733		—
Consumer loans	420		212		182		814		101,586		102,400		—
Total loans	$	5,814	$	2,430	$	29,369	$	37,613	$	4,017,776	$	4,055,389	$	1,746
December 31, 2012
Real estate loans:
Residential 1-4 family	$	6,353	$	1,741	$	24,054	$	32,148	$	1,834,302	$	1,866,450	$	—
Commercial real estate	85		—		6,750		6,835		368,842		375,677		—
Home equity line of credit	1,077		142		1,319		2,538		627,637		630,175		—
Residential land	2,851		75		7,788		10,714		15,101		25,815		—
Commercial construction	—		—		—		—		43,988		43,988		—
Residential construction	—		—		—		—		6,171		6,171		—
Commercial loans	3,052		2,814		1,098		6,964		714,385		721,349		131
Consumer loans	598		348		424		1,370		119,861		121,231		242
Total loans	$	14,016	$	5,120	$	41,433	$	60,569	$	3,730,287	$	3,790,856	$	373

Some of the IPPs provided sufficient information for Hawaiian Electric to determine that the IPP was not a VIE, or was either a “business” or “governmental organization,” and thus excluded from the scope of accounting standards for VIEs. Other IPPs declined to provide the information necessary for Hawaiian Electric to determine the applicability of accounting standards for VIEs.

~~The~~Since ~~credit~~2004, ~~risk~~Hawaiian ~~profile~~Electric ~~based~~has oncontinued ~~nonaccrual~~its ~~loans~~efforts to obtain from the IPPs the information necessary to make the determinations required under accounting standards for VIEs. In each year from 2005 to 2014, the Utilities sent letters to the identified IPPs requesting the required information. All of these IPPs declined to provide the necessary information, except that Kalaeloa later agreed to provide the information pursuant to the amendments to its PPA (see below) and ~~accruing~~an ~~loans~~entity 90owning ~~days~~a orwind ~~more~~farm ~~past~~provided ~~due~~information as required under its PPA. Management has concluded that the consolidation of two entities owning wind farms was not required as ~~follows:~~Hawaii Electric Light and Maui Electric do not have variable interests in the entities because the PPAs do not require them to absorb any variability of the entities. If the requested information is ultimately received from the remaining IPPs, a possible outcome of future analyses of such information is the consolidation of one or more of such IPPs in the Consolidated Financial Statements. The consolidation of any significant IPP could have a material effect on the Consolidated Financial Statements, including the recognition of a significant amount of assets and liabilities and, if such a consolidated IPP were operating at a loss and had insufficient equity, the potential recognition of such losses. If the Utilities determine they are required to consolidate the financial statements of such an IPP and the consolidation has a material effect, the Utilities would retrospectively apply accounting standards for VIEs.

	September 30, 2013				December 31, 2012
(in thousands)	Nonaccrualloans		Accruing loans90 days ormore past due		Nonaccrualloans		Accruing loans90 days ormore past due
Real estate loans:
Residential 1-4 family	$	18,908	$	—	$	26,721	$	—
Commercial real estate	4,483		—		6,750		—
Home equity line of credit	1,948		—		2,349		—
Residential land	3,606		1,746		8,561		—
Commercial construction	—		—		—		—
Residential construction	—		—		—		—
Commercial loans	21,308		—		20,222		131
Consumer loans	519		—		284		242
Total	$	50,772	$	1,746	$	64,887	$	373

Kalaeloa Partners, L.P. In October 1988, Hawaiian Electric entered into a PPA with Kalaeloa, subsequently approved by the PUC, which provided that Hawaiian Electric would purchase 180 megawatts (MW) of firm capacity for a period of 25 years beginning in May 1991. In October 2004, Hawaiian Electric and Kalaeloa entered into amendments to the PPA, subsequently approved by the PUC, which together effectively increased the firm capacity from 180 MW to 208 MW. The energy payments that Hawaiian Electric makes to Kalaeloa include: (1) a fuel component, with a fuel price adjustment based on the cost of low sulfur fuel oil, (2) a fuel additives cost component, and (3) a non-fuel component, with an adjustment based on changes in the Gross National Product Implicit Price Deflator. The capacity payments that Hawaiian Electric makes to Kalaeloa are fixed in accordance with the PPA. Kalaeloa also has a steam delivery cogeneration contract with another customer, the term of which coincides with the PPA. The facility has been certified by the Federal Energy Regulatory Commission as a Qualifying Facility under the Public Utility Regulatory Policies Act of 1978.

~~The~~Pursuant ~~total~~to ~~carrying~~the ~~amount~~current ~~and~~accounting standards for VIEs, Hawaiian Electric is deemed to have a variable interest in Kalaeloa by reason of the ~~total~~provisions ~~unpaid~~of ~~principal~~Hawaiian ~~balance~~Electric’s PPA with Kalaeloa. However, management has concluded that Hawaiian Electric is not the primary beneficiary of ~~impaired~~Kalaeloa ~~loans~~because Hawaiian Electric does not have the power to direct the activities that most significantly impact Kalaeloa’s economic performance nor the obligation to absorb Kalaeloa’s expected losses, ~~with~~if ~~and~~any, ~~without~~that ~~recorded~~could ~~allowance~~potentially be significant to Kalaeloa. Thus, Hawaiian Electric has not consolidated Kalaeloa in its consolidated financial statements. A significant factor affecting the level of expected losses Hawaiian Electric could potentially absorb is the fact that Hawaiian Electric’s exposure to fuel price variability is limited to the remaining term of the PPA as compared to the facility’s remaining useful life. Although Hawaiian Electric absorbs fuel price variability for ~~loan~~the remaining term of the PPA, the PPA does not currently expose Hawaiian Electric to losses as the fuel and ~~combined~~fuel related energy payments under the PPA have been approved by the PUC for recovery from customers through base electric rates and through Hawaiian Electric’s ECAC to the extent the fuel and fuel related energy payments are not included in base energy rates. As of June 30, ~~were~~2015, asHawaiian ~~follows:~~Electric’s accounts payable to Kalaeloa amounted to $14 million.

Commitments and contingencies.

Fuel contracts. The Utilities have contractual agreements to purchase minimum quantities of fuel oil, diesel fuel and biodiesel for multi-year periods, some through October 2017. Fossil fuel prices are tied to the market prices of crude oil and petroleum products in the Far East and U.S. West Coast and the biodiesel price is tied to the market prices of animal fat feedstocks in the U.S. West Coast and U.S. Midwest.

	September 30, 2013						Three months ended September 30, 2013				Nine months ended September 30, 2013
(in thousands)	Recordedinvestment		Unpaidprincipalbalance		RelatedAllowance		Averagerecordedinvestment		Interestincomerecognized*		Averagerecordedinvestment		Interestincomerecognized*
With no related allowance recorded
Real estate loans:
Residential 1-4 family	$	10,121	$	13,122	$	—	$	9,777	$	62	$	12,304	$	294
Commercial real estate	—		—		—		—		—		1,069		—
Home equity line of credit	523		1,068		—		526		—		606		—
Residential land	5,734		6,712		—		6,095		216		7,477		435
Commercial construction	—		—		—		—		—		—		—
Residential construction	—		—		—		—		—		—		—
Commercial loans	6,311		8,624		—		4,941		7		4,518		8
Consumer loans	19		19		—		20		—		20		—
	22,708		29,545		—		21,359		285		25,994		737
With an allowance recorded
Real estate loans:
Residential 1-4 family	7,147		7,167		943		7,155		83		6,411		259
Commercial real estate	4,484		4,536		888		4,028		—		6,157		151
Home equity line of credit	—		—		—		—		—		—		—
Residential land	6,101		6,228		1,585		6,105		102		7,123		304
Commercial construction	—		—		—		—		—		—		—
Residential construction	—		—		—		—		—		—		—
Commercial loans	16,466		17,978		2,679		16,524		67		15,606		72
Consumer loans	—		—		—		—		—		—		—
	34,198		35,909		6,095		33,812		252		35,297		786
Total
Real estate loans:
Residential 1-4 family	17,268		20,289		943		16,932		145		18,715		553
Commercial real estate	4,484		4,536		888		4,028		—		7,226		151
Home equity line of credit	523		1,068		—		526		—		606		—
Residential land	11,835		12,940		1,585		12,200		318		14,600		739
Commercial construction	—		—		—		—		—		—		—
Residential construction	—		—		—		—		—		—		—
Commercial loans	22,777		26,602		2,679		21,465		74		20,124		80
Consumer loans	19		19		—		20		—		20		—
	$	56,906	$	65,454	$	6,095	$	55,171	$	537	$	61,291	$	1,523

Updates. On August 27, 2014, Chevron Products Company (Chevron) and Hawaiian Electric entered into a first amendment of their Low Sulfur Fuel Oil Supply Contract, which was approved by the PUC in March 2015. The Amendment reduces the price of fuel above certain volumes, allows for increases in the volume of fuel, and modifies the specification of certain petroleum products supplied under the contract. In addition, Chevron agreed to supply a blend of low sulfur fuel oil (LSFO) and diesel as soon as January 2016 (for supply through the end of the contract term, December 31, 2016) to help Hawaiian Electric meet more stringent EPA air emission requirements known as Mercury and Air Toxics Standards.

The Utilities are parties to amended contracts for the supply of industrial fuel oil and diesel fuels with Chevron and Hawaii Independent Energy, LLC (HIE), respectively, which were scheduled to end December 31, 2015. In August 2014, Chevron and the Utilities entered into a third amendment to the Inter-Island Industrial Fuel Oil and Diesel Fuel Supply Contract, which amendment extended the term of the contract through December 31, 2016 and provided for automatic renewal for annual terms thereafter unless earlier terminated by either party. In February 2015, Hawaiian Electric executed a similar extension, through December 31, 2016, of the corresponding Inter-Island Industrial Fuel Oil and Diesel Fuel Supply Contract with HIE.

In June 2015, the Utilities issued Requests for Proposals (RFP) for most of their fuel needs with supplies beginning in 2017 after the expiration of Chevron LSFO and Chevron/HIE Interisland contracts on December 31, 2016. Proposals were received in July 2015 and new contracts, which would be subject to PUC approval, are expected to be executed by December 31, 2015.

AES Hawaii, Inc. Under a PPA entered into in March 1988, as amended, for a period of 30 years beginning September 1992, Hawaiian Electric agreed to purchase 180 MW of firm capacity from AES Hawaii, Inc. (AES Hawaii). In August 2012, Hawaiian Electric filed an application with the PUC seeking an exemption from the PUC’s Competitive Bidding Framework to negotiate an amendment to the PPA to purchase 186 MW of firm capacity, extend the PPA term until 2032, and amend the energy pricing formula in the PPA. The PUC approved the exemption in April 2013, and Hawaiian Electric has been in negotiations with AES Hawaii; however, Hawaiian Electric and AES Hawaii have not reached agreement on an amendment. In June 2015, AES Hawaii filed an arbitration demand regarding a dispute about whether Hawaiian Electric was obligated to buy up to 9 MW of additional capacity based on a 1992 letter. Hawaiian Electric believes the claim asserted in the arbitration demand is without merit. Hawaiian Electric has responded to the arbitration demand. Management cannot predict the outcome of the arbitration proceeding.

Liquefied natural gas. On May 31, 2015 the previous August 2014 agreement with Fortis BC Energy Inc. (Fortis) for liquefaction capacity for liquefied natural gas (LNG) was superseded with a liquefaction Heads of Agreement by and between FortisBC Holdings Inc. and Hawaiian Electric Company, Inc. The agreement, which is subject to Hawaii PUC approval, other regulatory approvals and permits, and other conditions precedent before it becomes effective, provides for LNG liquefaction capacity purchases of 700,000 tonnes per year for the first five years, 600,000 tonnes per year for the next five years, and 500,000 tonnes per year for the last ten years. Fortis must also obtain regulatory and other approvals for the agreement to become effective. The Fortis agreement is assignable and can be assigned to the selected bidder in the Utilities’ RFP for the supply of containerized LNG and will help ensure that liquefaction capacity is available at pricing that management believes will lower customer bills.

Environmental regulation. The Utilities are subject to environmental laws and regulations that regulate the operation of existing facilities, the construction and operation of new facilities and the proper cleanup and disposal of hazardous waste and toxic substances. In recent years, legislative, regulatory and governmental activities related to the environment, including proposals and rulemaking under the Clean Air Act and Clean Water Act (CWA), have increased significantly and management anticipates that such activity will continue.

On August 14, 2014, the Environmental Protection Agency (EPA) published in the Federal Register the final regulations required by section 316(b) of the CWA designed to protect aquatic organisms from adverse impacts associated with existing power plant cooling water intake structures. The regulations were effective October 14, 2014 and apply to the cooling water systems for the steam generating units at Hawaiian Electric’s power plants on the island of Oahu. The regulations prescribe a process, including a number of required site-specific studies, for states to develop facility-specific entrainment and impingement controls to be incorporated in each facility’s National Pollutant Discharge Elimination System permit. In the case of Hawaiian Electric’s power plants, there are a number of studies that have yet to be completed before Hawaiian Electric and the State of Hawaii Department of Health (DOH) can determine what entrainment or impingement controls, if any, might be necessary at the affected facilities to comply with the new 316(b) rule.

On February 16, 2012, the Federal Register published the EPA’s final rule establishing the EPA’s National Emission Standards for Hazardous Air Pollutants for fossil-fuel fired steam electrical generating units (EGUs). The final rule, known as the Mercury and Air Toxics Standards (MATS), applies to the 14 EGUs at Hawaiian Electric’s power plants. MATS establishes the Maximum Achievable Control Technology standards for the control of hazardous air pollutants emissions from new and existing EGUs. Based on a review of the final rule and the benefits and costs of alternative compliance strategies, Hawaiian

	December 31, 2012						Year ended December 31, 2012
(in thousands)	Recordedinvestment		Unpaidprincipalbalance		Relatedallowance		Averagerecordedinvestment		Interestincomerecognized*
With no related allowance recorded
Real estate loans:
Residential 1-4 family	$	14,633	$	20,247	$	—	$	16,688	$	294
Commercial real estate	2,929		2,929		—		7,771		237
Home equity line of credit	581		1,374		—		632		1
Residential land	7,691		10,624		—		21,589		1,185
Commercial construction	—		—		—		—		—
Residential construction	—		—		—		—		—
Commercial loans	4,265		6,994		—		24,605		986
Consumer loans	21		21		—		23		—
	30,120		42,189		—		71,308		2,703
With an allowance recorded
Real estate loans:
Residential 1-4 family	4,803		4,803		384		4,204		250
Commercial real estate	3,821		3,840		535		1,295		—
Home equity line of credit	—		—		—		26		—
Residential land	9,984		10,364		3,221		7,428		575
Commercial construction	—		—		—		—		—
Residential construction	—		—		—		—		—
Commercial loans	16,033		16,912		2,659		8,429		23
Consumer loans	—		—		—		—		—
	34,641		35,919		6,799		21,382		848
Total
Real estate loans:
Residential 1-4 family	19,436		25,050		384		20,892		544
Commercial real estate	6,750		6,769		535		9,066		237
Home equity line of credit	581		1,374		—		658		1
Residential land	17,675		20,988		3,221		29,017		1,760
Commercial construction	—		—		—		—		—
Residential construction	—		—		—		—		—
Commercial loans	20,298		23,906		2,659		33,034		1,009
Consumer loans	21		21		—		23		—
	$	64,761	$	78,108	$	6,799	$	92,690	$	3,551

Electric has selected a MATS compliance strategy based on switching to lower emission fuels. The use of lower emission fuels will provide for MATS compliance at lower overall costs and avoid the reduction in operational flexibility imposed by emissions control equipment. Hawaiian Electric requested and received a one-year extension, resulting in a MATS compliance date of April 16, 2016. Hawaiian Electric submitted to the EPA a Petition for Reconsideration and Stay dated April 16, 2012, and a Request for Expedited Consideration dated August 14, 2013. The submittals asked the EPA to revise an emissions standard for non-continental oil-fired EGUs on the grounds that the promulgated standard was incorrectly derived. The Petition and Request submittals to the EPA included additional data to demonstrate that the existing standard is erroneous. On April 21, 2015, the EPA issued a notice denying Hawaiian Electric's MATS Petition for Reconsideration along with all other pending MATS petitions. Hawaiian Electric is now pursuing judicial relief through an appeal of EPA’s denial of the Petition. On June 29, 2015, the United State Supreme Court found that the EPA’s determination that it was appropriate and “necessary” to regulate hazardous air pollutants from power plants was flawed because the EPA did not take the costs of compliance into account. The Supreme Court sent the MATS rule case back to the D.C. Circuit Court of Appeals for further proceedings. The likely timeframe for action by the Circuit Court is October 2015. Pending action by the Circuit Court, Hawaiian Electric will continue with its plan to comply with the MATS requirements by April 16, 2016.

~~___________________________________________~~On February 6, 2013, the EPA issued a guidance document titled “Next Steps for Area Designations and Implementation of the Sulfur Dioxide National Ambient Air Quality Standard,” which outlines a process that will provide the states additional flexibility and time for their development of one-hour sulfur dioxide (SO2) National Ambient Air Quality Standard (NAAQS) implementation plans. In May 2014, the EPA published a proposed data requirements rule for states to characterize their air quality in relation to the one-hour SO2 NAAQS. Under the proposed rule, the EPA expects to designate areas as attaining, or not attaining, the one-hour SO2 NAAQS in December 2017 or December 2020, depending on whether the area was characterized through modeling or monitoring. Hawaiian Electric will work with the DOH in implementing the one-hour SO2 NAAQS and in developing cost-effective strategies for NAAQS compliance, if needed.

* SinceDepending ~~loan~~upon ~~was~~the ~~classified~~rules asand ~~impaired~~guidance developed for compliance with the more stringent NAAQS, the Utilities may be required to incur material capital expenditures and other compliance costs, but such amounts and their timing are not determinable at this time. Additionally, the combined effects of the CWA 316(b) regulations, the MATS rule and the more stringent NAAQS may contribute to a decision to retire or deactivate certain generating units earlier than anticipated.

~~Troubled~~Hawaiian ~~debt~~Electric, ~~restructurings. A~~Hawaii ~~loan~~Electric ~~modification~~Light isand ~~deemed~~Maui toElectric, belike aother ~~troubled~~utilities, ~~debt~~periodically ~~restructuring~~encounter ~~(TDR)~~petroleum ~~when~~or ~~ASB~~other ~~grants~~chemical areleases ~~concession~~into itthe ~~would~~environment ~~not~~associated ~~otherwise~~with ~~consider~~current ~~were~~or itprevious ~~not for the borrower’s financial difficulty~~operations. ~~When~~The aUtilities ~~borrower~~report ~~experiencing~~and ~~financial~~take ~~difficulty~~action ~~fails to make a required payment~~ on athese ~~loan~~releases orwhen isand inas ~~imminent~~required ~~default,~~by ~~ASB~~applicable ~~takes~~law aand ~~number~~regulations. ofThe ~~steps~~Utilities tobelieve ~~improve~~ the ~~collectability~~costs of ~~the~~responding ~~loan and maximize the likelihood of full repayment. At times, ASB may modify or restructure a loan~~ to ~~help~~such areleases ~~distressed~~identified ~~borrower improve its financial position~~ to ~~eventually~~date bewill ~~able~~not tohave ~~fully~~a ~~repay~~material ~~the~~adverse ~~loan~~effect, ~~provided~~individually ~~the~~or ~~borrower~~in ~~has demonstrated both~~ the ~~willingness~~aggregate, ~~and~~on ~~the~~Hawaiian ~~ability~~Electric’s toconsolidated ~~fulfill~~results ~~the~~of ~~modified~~operations, ~~terms.~~financial ~~TDR~~condition ~~loans are considered an alternative to foreclosure~~ or ~~liquidation with the goal of minimizing losses to ASB and maximizing recovery~~liquidity.

~~ASB~~Potential ~~may~~Clean ~~consider~~Air ~~various~~Act ~~types~~Enforcement. On July 1, 2013, Hawaii Electric Light and Maui Electric received a letter from the U.S. Department of ~~concessions~~Justice (DOJ) asserting potential violations of the Prevention of Significant Deterioration (PSD) and Title V requirements of the Clean Air Act involving the Hill and Kahului Power Plants. The EPA referred the matter to the DOJ for enforcement based on Hawaii Electric Light’s and Maui Electric’s responses to information requests in ~~granting~~2010 and 2012. The letter expresses an interest in resolving the matter without the issuance of a ~~TDR~~notice ~~including~~of ~~maturity~~violation. ~~date~~The ~~extensions~~parties had preliminary discussions in February 2014, ~~extended~~and ~~amortization~~are continuing to negotiate toward a resolution of ~~principal,~~the ~~temporary~~DOJ’s ~~deferral~~claims. As part of ~~principal~~the ~~payments~~ongoing negotiations, ~~and~~the ~~temporary~~DOJ ~~interest~~proposed ~~rate~~in ~~reductions~~November 2014 entering into a consent decree pursuant to which the Utilities would install certain pollution controls and pay a penalty. ~~ASB~~The ~~rarely~~Utilities ~~grants~~are currently reviewing the proposal, but are unable to estimate the amount or effect of a consent decree, if any, at this time.

Former Molokai Electric Company generation site. In 1989, Maui Electric acquired by merger Molokai Electric Company. Molokai Electric Company had sold its former generation site (Site) in 1983, but continued to operate at the Site under a lease until 1985. The EPA has since performed Brownfield assessments of the Site that identified environmental impacts in the subsurface. Although Maui Electric never operated at the Site and operations there had stopped four years before the merger, in discussions with the EPA and the DOH, Maui Electric agreed to undertake additional investigations at the Site and an adjacent parcel that Molokai Electric Company had used for equipment storage (the Adjacent Parcel) to determine the extent of impacts of subsurface contaminants. A 2011 assessment by a Maui Electric contractor of the Adjacent Parcel identified environmental impacts, including elevated polychlorinated biphenyls (PCBs) in the subsurface soils. In cooperation with the DOH and EPA, Maui Electric is further investigating the Site and the Adjacent Parcel to determine the extent of impacts of PCBs, residual fuel oils, and other subsurface contaminants. In March 2012, Maui Electric accrued an additional $3.1 million (reserve balance of $3.6 million as of June 30, 2015) for the additional investigation and estimated cleanup costs at the Site and the Adjacent Parcel; however, final costs of remediation will depend on the results of continued investigation. Maui Electric received the DOH’s and EPA’s comments on a draft site investigation plan for site characterization in the fourth quarter of 2013. Management concluded that these comments did not require a change to the reserve balance. The site investigation plan was revised to address the EPA’s and DOH’s comments. The final site investigation plan was submitted to the DOH and

~~principal~~EPA ~~forgiveness~~ in ~~its~~December ~~TDR~~2014 ~~modifications.~~for ~~Residential~~their ~~loan~~review ~~modifications~~and ~~generally involve interest rate reduction, extending the amortization period, or capitalizing certain delinquent amounts owed not to exceed the original loan balance~~approval. ~~Land~~The ~~loans~~DOH atand ~~origination~~EPA are ~~typically~~currently ~~structured~~reviewing ~~as a three-year term, interest-only monthly payment with a balloon payment due at maturity. Land loan TDR modifications typically involve extending~~ the ~~maturity~~final ~~date~~site upinvestigation ~~to five years and converting the payments from interest-only to principal and interest monthly, at the same or higher interest rate~~plan. ~~Commercial~~Maui ~~loan~~Electric ~~modifications~~is ~~generally~~awaiting ~~involve~~formal ~~extensions~~agency ofapproval ~~maturity dates, extending the amortization period, and temporary deferral~~ of ~~principal~~this ~~payments.~~plan ~~ASB~~before ~~does~~commencing ~~not reduce~~ the ~~interest~~site ~~rate on commercial loan TDR modifications~~investigation. ~~Occasionally, additional collateral and/or guaranties are obtained.~~

~~All~~Pearl ~~TDR~~Harbor ~~loans~~sediment ~~are~~study. The ~~classified~~U.S. asNavy ~~impaired~~has ~~and~~completed ~~are~~a ~~segregated~~remedial investigation and ~~reviewed~~is ~~separately~~currently ~~when~~conducting ~~assessing~~a ~~the~~feasibility ~~adequacy~~study offor the ~~allowance~~remediation ~~for~~of ~~loan~~contaminated ~~losses~~sediment ~~based~~at onseveral ~~the~~locations ~~appropriate~~in ~~method~~Pearl ofHarbor. ~~measuring~~In ~~impairment: (1) present~~the ~~value~~course of ~~expected~~its ~~future~~study, ~~cash~~the ~~flows~~Navy ~~discounted~~identified atelevated ~~the~~levels ~~loan’s~~of ~~effective~~PCBs ~~original~~in ~~contractual~~the ~~rate,~~sediment ~~(2) fair~~in ~~value~~East Loch of ~~collateral~~Pearl ~~less~~Harbor, ~~cost~~offshore tofrom ~~sell,~~the orWaiau ~~(3) observable~~Power ~~market price~~Plant. The ~~financial~~results ~~impact~~ of the ~~calculated~~Navy’s ~~impairment~~study ~~amount~~to isdate, anincluding ~~increase~~sampling todata ~~the~~and ~~allowance~~possible ~~associated~~remediation ~~with~~approaches, ~~the~~are ~~modified~~undergoing ~~loan.~~further ~~When~~federal ~~available~~review. ~~information~~Hawaiian ~~confirms~~Electric ~~that~~submitted ~~specific~~comments ~~loans~~on orthe ~~portions~~Navy’s ~~thereof~~study, ~~are~~including ~~uncollectible~~the ~~(confirmed~~further ~~losses),~~investigation ~~these~~and ~~amounts~~analyses that are ~~charged~~necessary ~~off~~to ~~against~~identify ~~the~~appropriate ~~allowance~~remedial ~~for~~options ~~loan~~and ~~losses~~actions.

~~Loan~~In ~~modifications~~July 2014, the Navy notified Hawaiian Electric of the Navy’s determination that ~~occurred~~Hawaiian ~~were~~Electric asis ~~follows~~responsible for cleanup of the ~~indicated~~area ~~periods:~~offshore of the Waiau Power Plant. The Navy has also requested that Hawaiian Electric reimburse the costs incurred by the Navy to date to investigate the area, and is asking Hawaiian Electric to engage in negotiations regarding the financing and undertaking of future response actions to address the sediment contamination offshore from the Waiau Power Plant. The extent of the contamination, the appropriate remedial measures to address it, and Hawaiian Electric’s potential responsibility for any associated costs, including any past costs incurred by the Navy, have not yet been determined. In December 2014, Hawaiian Electric recorded a reserve of $0.8 million for additional investigation of the PCBs in the sediment offshore from the Waiau Power Plant; however, final costs of remediation will depend on the results of the additional investigation. On March 23, 2015, Hawaiian Electric received from the EPA a letter requesting that Hawaiian Electric submit within 45 days a work plan to assess potential sources and extent of PCB contamination onshore at the Waiau Power Plant. Hawaiian Electric submitted a sampling and analysis work plan to the EPA and the State Department of Health; the work plan is currently being reviewed by the regulators. The extent of the onshore contamination, the appropriate remedial measures to address it, and any associated costs have not yet been determined.

	Three months ended September 30, 2013					Nine months ended September 30, 2013
	Number of	Outstanding recorded investment				Number of	Outstanding recorded investment
(dollars in thousands)	contracts	Pre-modification		Post-modification		contracts	Pre-modification		Post-modification
Troubled debt restructurings
Real estate loans:
Residential 1-4 family	14	$	2,864	$	2,874	32	$	8,631	$	8,712
Commercial real estate	—	—		—		—	—		—
Home equity line of credit	—	—		—		4	462		215
Residential land	9	2,943		2,943		16	4,983		4,974
Commercial loans	3	2,076		2,076		6	2,790		2,790
Consumer loans	—	—		—		—	—		—
	26	$	7,883	$	7,893	58	$	16,866	$	16,691

Hawaiian Electric has also conducted a search for other potential sources of sediment contamination in the Waiau area that are unrelated to electric power generation at its Waiau Power Plant. A potential source was identified east of the plant. This potential source, located on the property currently occupied by the City and County (C&C) of Honolulu’s Neal S. Blaisdell Park, is a former Naval Reserve site where a used drum storage area, a waste oil burning pit, and an oil/water separator were operated by the Navy from the 1940s until approximately 1963. To further assess this former Naval Reserve site, Hawaiian Electric has requested environmental investigation reports, environmental data, and permits for this property and the adjacent Waimalu Stream (e.g., dredging permits and related environmental impact assessments and studies) from several federal and state agencies, as well as the C&C of Honolulu. The contribution of PCBs to sediment contamination in East Loch from this potential source has not yet been determined.

	Three months ended September 30, 2012					Nine months ended September 30, 2012
	Number of	Outstanding recorded investment				Number of	Outstanding recorded investment
(dollars in thousands)	contracts	Pre-modification		Post-modification		contracts	Pre-modification		Post-modification
Troubled debt restructurings
Real estate loans:
Residential 1-4 family	4	$	1,415	$	1,332	26	$	5,884	$	5,614
Commercial real estate	—	—		—		—	—		—
Home equity line of credit	—	—		—		—	—		—
Residential land	6	1,168		1,001		21	4,676		4,022
Commercial loans	4	517		517		18	2,546		2,546
Consumer loans	—	—		—		—	—		—
	14	$	3,100	$	2,850	65	$	13,106	$	12,182

Global climate change and greenhouse gas emissions reduction. National and international concern about climate change and the contribution of greenhouse gas (GHG) emissions (including carbon dioxide emissions from the combustion of fossil fuels) to climate change have led to action by the State and to federal legislative and regulatory proposals to reduce GHG emissions.

~~Loans~~In ~~modified~~July in2007, ~~TDRs~~Act ~~that~~234, ~~experienced~~which requires a ~~payment~~statewide ~~default~~reduction of 90GHG ~~days~~emissions by January 1, 2020 to levels at or ~~more~~below the statewide GHG emission levels in ~~2013~~1990, ~~and~~became ~~2012~~law in Hawaii. On June 20, 2014, the Governor signed the final regulations required to implement Act 234 and ~~for~~the ~~which~~regulations went into effect on June 30, 2014. In general, the ~~payment~~regulations ~~default~~will ~~occurred~~require ~~within~~affected ~~one~~sources that have the potential to emit GHGs in excess of established thresholds to reduce GHG emissions by 16% below 2010 emission levels by 2020. The regulations will also assess affected sources an annual fee based on tons per year of GHG emissions commencing on the ~~modification~~effective date of the regulations, estimated to be approximately $0.5 million annually for the Utilities. The DOH GHG regulations also track the federal “Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule” (GHG Tailoring Rule, see below) and would create new thresholds for GHG emissions from new and existing stationary source facilities. State of Hawaii Act 234 requires a statewide reduction of GHG emissions by January 1, 2020 to levels at or below the statewide GHG emission levels in 1990. The state GHG regulations were aseffective ~~follows:~~on June 30, 2014. In general, the state GHG regulations require entities that have the potential to emit GHGs in excess of established thresholds to reduce GHG emissions by 16 percent below 2010 emission levels by 2020. The latest assessment of the proposed federal and final state GHG rules is that the continued growth in renewable power generation will significantly reduce the compliance costs and risk for the Utilities.

Several approaches (e.g., “cap and trade”) to GHG emission reduction have been either introduced or discussed in the U.S. Congress; however, no federal legislation has yet been enacted.

On September 22, 2009, the EPA issued its Final Mandatory Reporting of Greenhouse Gases Rule, which requires that sources emitting GHGs above certain threshold levels monitor and report GHG emissions. The Utilities have submitted the required reports for 2010 through 2013 to the EPA. In December 2009, the EPA made the finding that motor vehicle GHG

	Three months ended September 30, 2013			Nine months ended September 30, 2013
(dollars in thousands)	Number of contracts	Recorded investment		Number of contracts	Recorded investment
Troubled debt restructurings that subsequently defaulted
Real estate loans:
Residential 1-4 family	—	$	—	—	$	—
Commercial real estate	—	—		—	—
Home equity line of credit	1	67		1	67
Residential land	—	—		—	—
Commercial loans	3	669		3	669
Consumer loans	—	—		—	—
	4	$	736	4	$	736

emissions endanger public health or welfare. Since then, the EPA has also issued rules that begin to address GHG emissions from stationary sources, like the Utilities’ EGUs.

	Three months ended September 30, 2012			Nine months ended September 30, 2012
(dollars in thousands)	Number of contracts	Recorded investment		Number of contracts	Recorded investment
Troubled debt restructurings that subsequently defaulted
Real estate loans:
Residential 1-4 family	—	$	—	—	$	—
Commercial real estate	—	—		—	—
Home equity line of credit	—	—		—	—
Residential land	—	—		—	—
Commercial loans	—	—		1	488
Consumer loans	—	—		—	—
	—	$	—	1	$	488

In June 2010, the EPA issued its GHG Tailoring Rule covering the permitting of new or modified stationary sources that have the potential to emit GHGs in greater quantities than the thresholds set forth in the rule, under the Prevention of Significant Deterioration program. On June 23, 2014, the U.S. Supreme Court issued a decision that invalidated the GHG Tailoring Rule, to the extent it regulated sources based solely on their GHG emissions. It also invalidated the GHG emissions threshold for regulation.

IfOn ~~loans~~December ~~modified~~19, in2014, athe ~~TDR~~EPA ~~subsequently~~released ~~default,~~two ~~ASB~~memoranda ~~evaluates~~outlining the ~~loan~~Agency’s plan for ~~further~~addressing ~~impairment~~the U.S. ~~Based~~Supreme onCourt’s ~~its~~decision. ~~evaluation~~Hawaiian Electric, ~~adjustments~~Hawaii ~~may~~Electric beLight ~~made~~and inMaui Electric are evaluating the ~~allocation~~potential impacts of the ~~allowance~~Agency’s orplan ~~partial~~on ~~charge-offs~~utility ~~may~~operations beand ~~taken~~permitting. toOn ~~further~~January ~~write-down~~8, 2014, the ~~carrying~~EPA ~~value~~published ofin the ~~loan~~Federal Register its new proposal for New Source Performance Standards for GHG from new generating units. ~~Commitments~~The toproposed ~~lend~~rule ~~additional~~on ~~funds~~GHG tofrom ~~borrowers~~new ~~whose~~EGUs ~~loan~~does ~~terms~~not ~~have~~apply ~~been~~to ~~impaired~~oil- fired combustion turbines or ~~modified~~diesel inengine ~~TDRs~~generators, ~~totaled~~and ~~$0.3~~is ~~million~~not asotherwise ofexpected ~~September 30,~~to ~~2013~~have significant impacts on the Utilities.

~~Litigation. In~~On ~~March 2011~~June 18, a2014, ~~purported~~the ~~class~~EPA ~~action~~published ~~lawsuit~~in ~~was~~the ~~filed~~Federal inRegister ~~the~~its ~~First~~proposed ~~Circuit~~rule ~~Court~~for ofGHG emissions (i.e., carbon emission) from existing power plants. The proposed rule, known as the ~~State~~Clean ofPower ~~Hawaii~~Plan, bysets ainterim ~~customer~~and ~~who~~final ~~claimed~~state-wide, ~~that~~state-specific ~~ASB~~emission ~~had~~performance ~~improperly~~goals, ~~charged~~expressed ~~overdraft~~as ~~fees~~lb onCO2/MWh, ~~debit~~that ~~card~~would ~~transactions~~apply to the state’s affected sources. The ~~lawsuit~~interim isgoal ~~still~~would inapply ~~its~~as ~~preliminary~~an ~~stage~~average over the period 2020 through 2029, ~~thus~~with the final goal to be met by 2030. On the same date, the ~~probable~~EPA ~~outcome~~also published a separate rule for modified and ~~range~~reconstructed power plants. On August, 3, 2015, the EPA released the final version of ~~reasonably~~the ~~possible~~Clean ~~loss~~Power ~~are~~Plan, ~~not~~which ~~determinable~~sets carbon emission standards for fossil fuel fired electric generating units at ~~this~~power ~~time~~plants and carbon emission reduction goals for states. The final Clean Power Plan specifically exempts power plants in Hawaii, including those of Hawaiian Electric and its subsidiaries, as well as power plants in Alaska, Guam and Puerto Rico.

~~ASB~~The isUtilities ~~subject~~have intaken, ~~the~~and ~~normal~~continue ~~course~~to ofidentify ~~business~~opportunities to ~~pending~~take, ~~and~~direct ~~threatened~~action ~~legal~~to ~~proceedings.~~reduce ~~Management~~GHG ~~does~~emissions from their operations, including, but not ~~anticipate~~limited to, supporting DSM programs that ~~the~~foster ~~aggregate~~energy ~~ultimate~~efficiency, ~~liability~~using ~~arising~~renewable ~~out~~resources for energy production and purchasing power from IPPs generated by renewable resources, burning renewable biodiesel in Hawaiian Electric’s Campbell Industrial Park combustion turbine No. 1 (CIP CT-1), using biodiesel for startup and shutdown of ~~these~~selected ~~pending~~Maui orElectric ~~threatened~~generating ~~legal~~units, ~~proceedings~~and ~~will~~testing bebiofuel ~~material~~blends toin ~~its~~other ~~financial~~Hawaiian ~~position~~Electric and Maui Electric generating units. ~~However~~The Utilities are also working with the State of Hawaii and other entities to pursue the use of liquefied natural gas as a cleaner and lower cost fuel to replace, ~~ASB~~at ~~cannot~~least ~~rule out~~in part, the ~~possibility~~petroleum oil that ~~such~~would ~~outcomes~~otherwise ~~could~~be ~~have~~used. aManagement ~~material~~is ~~adverse~~unable ~~effect~~to evaluate the ultimate impact on the ~~results~~Utilities’ operations of ~~operations~~eventual orcomprehensive ~~liquidity~~GHG ~~for~~regulation. However, management believes that the various initiatives it is undertaking will provide a ~~particular~~sound ~~reporting~~basis ~~period~~for inmanaging the ~~future~~Utilities’ carbon footprint and meeting GHG reduction goals that will ultimately emerge.

While the timing, extent and ultimate effects of climate change cannot be determined with any certainty, climate change is predicted to result in sea level rise, which could potentially impact coastal and other low-lying areas (where much of the Utilities’ electric infrastructure is sited), and could cause erosion of beaches, saltwater intrusion into aquifers and surface ecosystems, higher water tables and increased flooding and storm damage due to heavy rainfall. The effects of climate change on the weather (for example, floods or hurricanes), sea levels, and water availability and quality have the potential to materially adversely affect the results of operations, financial condition and liquidity of the Utilities. For example, severe weather could cause significant harm to the Utilities’ physical facilities.

Asset retirement obligations. Asset retirement obligations (AROs) represent legal obligations associated with the retirement of certain tangible long-lived assets, are measured as the present value of the projected costs for the future retirement of specific assets and are recognized in the period in which the liability is incurred if a reasonable estimate of fair value can be made. The Utilities’ recognition of AROs have no impact on their earnings. The cost of the AROs is recovered over the life of the asset through depreciation. AROs recognized by the Utilities relate to obligations to retire plant and equipment, including removal of asbestos and other hazardous materials.

Hawaiian Electric has recorded estimated AROs related to removing retired generating units at its Honolulu and Waiau power plants. These removal projects are ongoing, with significant activity and expenditures occurring in 2014 in partial settlement of these liabilities. Both removal projects are expected to continue through 2015.

Changes to the ARO liability included in “Other liabilities” on Hawaiian Electric’s balance sheet were as follows:

5 · Retirement benefits



	Six months ended June 30
(in thousands)	2015			2014
Balance, beginning of period	$	29,419		$	43,106
Accretion expense	12			643
Liabilities incurred	—			—
Liabilities settled	(1,881		)	(6,052		)
Revisions in estimated cash flows	—			—
Balance, end of period	$	27,550		$	37,697

~~Defined~~Decoupling. In ~~benefit~~2010, ~~pension~~the ~~and~~PUC ~~other~~issued ~~postretirement~~an ~~benefit~~order ~~plans~~approving ~~information. For~~decoupling, ~~the~~which ~~first~~was ~~nine~~implemented ~~months~~by ofHawaiian ~~2013~~Electric on March 1, ~~the~~2011, ~~Company~~by ~~contributed~~Hawaii ~~$62~~Electric ~~million~~Light ~~(primarily~~on April 9, 2012 and by ~~the~~Maui ~~Utilities)~~Electric toon ~~its~~May 4, ~~pension~~2012. ~~and~~Decoupling ~~other~~is ~~postretirement~~a ~~benefit~~regulatory ~~plans,~~model ~~compared~~that tois ~~$64~~intended ~~million~~to ~~(primarily~~facilitate bymeeting the ~~Utilities)~~State inof ~~the~~Hawaii’s ~~first~~goals ~~nine~~to ~~months~~transition ofto ~~2012~~a clean energy economy and achieve an aggressive renewable portfolio standard. The ~~Company’s~~decoupling ~~current~~model ~~estimate~~implemented ofin ~~contributions~~Hawaii todelinks ~~its~~revenues ~~pension~~from sales and includes annual rate adjustments for certain other ~~postretirement~~operation ~~benefit~~and ~~plans~~maintenance in(O&M) ~~2013~~expenses isand ~~$83~~rate ~~million~~base changes. The decoupling mechanism has three components: (~~$81~~1) a ~~million~~sales bydecoupling ~~the~~component ~~Utilities~~via a revenue balancing account (RBA), $(2) a ~~million~~revenue byescalation ~~HEI~~component ~~and~~via ~~nil~~a byRAM ~~ASB~~and (3) an earnings sharing mechanism, ~~compared~~which towould ~~$78~~provide ~~million~~for ~~($63~~a ~~million~~reduction byof revenues between rate cases in the ~~Utilities,~~event $2the ~~million~~utility byexceeds ~~HEI~~the ~~and~~return ~~$13~~on ~~million~~average bycommon ~~ASB~~equity (ROACE) allowed in ~~2012~~its most recent rate case. InDecoupling ~~addition,~~provides ~~the~~for ~~Company~~more ~~expects~~timely tocost ~~pay~~recovery ~~directly~~and $2earning ~~million~~on ~~($1~~investments, ~~million~~and ~~each~~has byresulted in an improvement in the Utilities’ ~~and~~under-earning ~~HEI)~~situation ofthat ~~benefits~~had inexisted ~~2013,~~prior ~~compared~~ to $1the ~~million~~implementation ~~paid~~of ~~in 2012~~decoupling.

On ~~July 6~~May 31, ~~2012~~2013, ~~President~~as ~~Obama~~provided ~~signed~~for ~~the~~in ~~Moving~~its ~~Ahead~~original ~~for~~order ~~Progress~~issued in ~~the~~2010 ~~21st Century~~approving ~~Act~~decoupling ~~(MAP-21),~~and ~~which~~citing ~~included~~three ~~provisions~~years ~~related~~of toimplementation ~~the~~experience ~~funding~~for ~~and~~Hawaiian ~~administration~~Electric, ofthe ~~pension~~PUC ~~plans.~~opened ~~This~~an ~~law~~investigative ~~does~~docket ~~not~~to ~~affect~~review whether the ~~Company’s~~decoupling ~~accounting~~mechanisms ~~for~~are ~~pension~~functioning ~~benefits;~~as ~~therefore~~intended, ~~the~~are ~~net~~fair ~~periodic~~to ~~benefit~~the ~~costs~~Utilities ~~disclosed~~and ~~for~~their ~~the~~ratepayers, ~~plans~~and ~~were~~are ~~not~~in ~~affected~~the public interest. The ~~Company~~PUC ~~elected~~affirmed toits ~~apply~~support ~~MAP-21~~ for ~~2012,~~the ~~which~~continuation ~~improved~~of the ~~plans’~~sales ~~Adjusted~~decoupling ~~Funding Target Attainment Percentage~~ (~~AFTAP~~RBA) ~~for~~mechanism ~~funding~~ and ~~benefit~~stated ~~distribution~~its ~~purposes~~interest ~~and~~in ~~thereby~~evaluating ~~reduced~~ the ~~2012~~RAM ~~minimum~~to ~~funding~~ensure ~~requirement~~it ~~and~~provides ~~lifted~~ the ~~restrictions~~appropriate onbalance ~~accelerated~~of ~~distribution~~risks, ~~options~~costs, ~~(which~~incentives ~~restrictions~~and ~~were~~performance inrequirements, ~~effect~~as ~~from~~well ~~April 1,~~as ~~2011~~administrative ~~to September 30~~efficiency, ~~2012) for HEI~~ and ~~Hawaiian~~whether ~~Electric~~the ~~and~~current ~~its~~interest ~~subsidiaries.~~rate ~~The~~applied ~~effects~~to ofthe ~~MAP-21~~outstanding ~~are~~RBA ~~expected~~balance tois ~~cause~~reasonable. ~~the~~In ~~minimum~~October ~~required~~2013, ~~funding under~~ the ~~Employee~~PUC ~~Retirement~~issued ~~Income~~orders ~~Security~~that ~~Act~~bifurcated ofthe ~~1974,~~proceeding ~~as amended~~ (~~ERISA)~~into toSchedule beA ~~less~~and ~~than~~Schedule ~~the~~B ~~net~~issues). ~~periodic~~On ~~cost~~February ~~for~~7, ~~2013 and~~ 2014~~; therefore~~, ~~to satisfy~~ the ~~requirements~~PUC ofissued ~~the~~a ~~Utilities~~decision ~~pension~~ and ~~other~~order ~~postretirement benefits~~ (~~OPEB~~D&O) ~~tracking~~on ~~mechanisms~~the Schedule A issues, ~~the~~which ~~Utilities~~made ~~expect~~certain modifications to ~~contribute~~ the ~~net~~decoupling ~~periodic~~mechanism. ~~cost~~Specifically, ~~for~~the ~~these~~D&O ~~years.~~required:

~~The~~• ~~Pension~~An ~~Protection~~adjustment ~~Act provides that if a pension plan’s funded status falls below certain levels, more conservative assumptions must be used~~ to ~~value obligations under~~ the ~~pension~~Rate ~~plan.~~Base ~~The~~RAM ~~HEI~~Adjustment ~~Retirement~~to ~~Plan~~include ~~fell~~90% ~~below~~of ~~these thresholds in 2011 and~~ the ~~minimum~~amount ~~required~~of ~~contribution for 2012 incorporated~~ the ~~more~~current ~~conservative~~RAM ~~assumptions~~Period ~~required.~~Rate ~~However,~~Base ~~the~~RAM ~~HEI~~Adjustment ~~Retirement~~that ~~Plan~~exceeds ~~met~~ the ~~threshold~~Rate ~~requirements~~Base inRAM ~~each~~Adjustment offrom ~~2012 and 2013 so that~~ the ~~more~~prior ~~conservative~~year, ~~assumptions~~to dobe ~~not~~effective ~~apply~~with ~~for either~~ the ~~2013~~Utilities’ or 2014 ~~valuation~~decoupling ~~of plan liabilities for purposes of calculating the minimum required contribution~~filing. ~~Other factors could cause changes to the required contribution levels.~~

~~The~~• ~~components~~Effective ofMarch ~~net~~1, ~~periodic~~2014, ~~benefit~~the ~~cost~~interest ~~for~~rate ~~consolidated~~to ~~HEI~~be ~~were~~applied ason ~~follows:~~the outstanding RBA balances to be the short term debt rate used in each Utilities last rate case (ranging from 1.25% to 3.25%), instead of the 6% that had been previously approved.

	Three months ended September 30												Nine months ended September 30
	Pension benefits						Other benefits						Pension benefits						Other benefits
(in thousands)	2013			2012			2013			2012			2013			2012			2013			2012
Service cost	$	14,097		$	10,816		$	1,077		$	1,054		$	42,307		$	32,404		$	3,229		$	3,158
Interest cost	16,187			16,868			1,891			2,252			48,600			50,612			5,677			6,756
Expected return on plan assets	(18,134		)	(17,796		)	(2,531		)	(2,579		)	(54,401		)	(53,388		)	(7,614		)	(7,757		)
Amortization of net transition obligation	—			1			—			—			—			1			—			—
Amortization of net prior service gain	(24		)	(81		)	(448		)	(448		)	(73		)	(244		)	(1,345		)	(1,345		)
Amortization of net actuarial loss	9,560			6,425			398			373			28,878			19,251			1,203			1,125
Net periodic benefit cost	21,686			16,233			387			652			65,311			48,636			1,150			1,937
Impact of PUC D&Os	(9,257		)	(3,460		)	(332		)	(552		)	(28,847		)	(12,294		)	(1,018		)	(1,648		)
Net periodic benefit cost (adjusted for impact of PUC D&Os)	$	12,429		$	12,773		$	55		$	100		$	36,464		$	36,342		$	132		$	289

As required, the Utilities have made available to the public, on the Utilities’ websites, performance metrics identified by the PUC. The Utilities are updating the performance metrics on a quarterly basis.

~~Consolidated~~On ~~HEI~~March ~~recorded~~31, ~~retirement~~2015, ~~benefits~~the ~~expense~~PUC issued an Order (the March Order) related to the Schedule B portion of ~~$24~~the ~~million~~proceeding to make certain further modifications to the decoupling mechanism, and ~~$27~~to ~~million~~establish a briefing schedule with respect to certain issues in the ~~first~~proceeding. ~~nine~~The ~~months~~March Order modified the RAM portion of ~~2013~~the decoupling mechanism to be capped at the lesser of the RAM Revenue Adjustment as currently determined (adjusted to eliminate the 90% limitation on the current RAM Period Rate Base RAM adjustment that was ordered in the Schedule A portion of the proceeding) and ~~2012~~a RAM Revenue Adjustment calculated based on the cumulative annual compounded increase in Gross Domestic Product Price Index (GDPPI) applied to the 2014 annualized target revenues (adjusted for certain items specified in the Order). The 2014 annualized target revenues represent the target revenues from the last rate case, ~~respectively~~and RAM revenues, offset by earnings sharing credits, if any, allowed under the decoupling mechanism through the 2014 decoupling filing. The Utilities may apply to the PUC for approval of recovery of revenues for Major Projects (including related baseline projects grouped together for consideration as Major Projects) through the RAM above the RAM cap or outside of the RAM through the Renewable Energy Infrastructure Program (REIP) surcharge or other adjustment mechanism. The RAM was amended on an interim basis pending the outcome of the PUC’s review of the Utilities’ Power Supply Improvement Plans. The triennial rate case cycle required under the decoupling mechanism continues to serve as the maximum period between the filing of general rate cases, and ~~charged~~the amendments to the ~~remaining~~RAM ~~amounts~~do ~~primarily~~not limit or dilute the ordinary opportunities for the Utilities to ~~electric~~seek ~~utility~~rate ~~plant~~relief according to conventional/traditional ratemaking procedures.

The Utilities have implemented pension and OPEB tracking mechanisms under which all of their retirement benefit expenses (except for executive life and nonqualified pension plan expenses) determined in accordance with GAAP are recovered over time. Under the tracking mechanisms, these retirement benefit costs that are over/under amounts allowed in rates are charged/credited to a regulatory asset/liability. The regulatory asset/liability for each utility will be amortized over 5 years beginning with the respective utility’s next rate case.

~~Defined~~In ~~contribution~~making ~~plans~~the ~~information. For~~modifications to the ~~first~~RAM ~~nine~~Adjustment, ~~months~~the ofPUC ~~2013~~stated ~~and~~the ~~2012,~~changes are designed to provide the ~~Company’s~~PUC ~~expense~~with ~~for~~control ~~its~~of ~~defined~~and ~~contribution~~prior ~~pension~~regulatory ~~plans~~review ~~under~~over ~~the~~substantial ~~Hawaiian~~additions ~~Electric~~to ~~Industries~~baseline ~~Retirement~~projects ~~Savings~~between ~~Plan~~rate ~~(HEIRSP)~~cases. ~~and~~The modifications do not deprive the ~~ASB~~Utilities ~~401(k) Plan~~of ~~was~~the ~~$3.1~~opportunity ~~million~~to ~~and~~recover ~~$2.7~~any ~~million,~~prudently ~~respectively,~~incurred ~~and~~expenditure ~~cash~~or ~~contributions~~limit ~~were~~orderly ~~$3.7~~recovery ~~million~~for ~~and~~necessary ~~$3.2~~expanded ~~million,~~capital ~~respectively~~programs.

6The ·RBA, ~~Share~~which is the sales decoupling component, was retained by the PUC in its March Order, and the PUC made no change in the authorized return on common equity. The PUC stated that performance-based ~~compensation~~ratemaking is not adopted at this time.

~~Under~~In accordance with the ~~2010~~March ~~Equity~~Order, the Utilities and ~~Incentive~~the ~~Plan~~Consumer ~~(EIP)~~Advocate filed on June 15, ~~HEI~~2015, ~~can~~their ~~issue~~Joint ~~shares~~Proposed Modified REIP Framework/Standards and Guidelines regarding the eligibility of ~~common~~projects ~~stock~~for ascost ~~incentive~~recovery ~~compensation~~above tothe ~~selected~~RAM ~~employees~~Cap inthrough the ~~form~~REIP ofsurcharge. On ~~stock~~the ~~options~~same date, ~~stock~~the ~~appreciation~~Utilities ~~rights,~~filed ~~restricted~~their ~~shares,~~proposed ~~restricted~~standards ~~stock~~and ~~units~~guidelines on the eligibility of projects for cost recovery through the RAM above the RAM cap. On June 30, ~~performance~~2015, ~~shares~~the Consumer Advocate filed comments on this proposal, and ~~other~~the ~~share-based~~County of Hawai‘i filed comments on both the REIP and ~~cash-based~~the ~~awards~~RAM above the RAM Cap proposals.

AsOn ofMay ~~September 30~~28, ~~2013~~2015, ~~there~~the ~~were~~PUC ~~3.6~~issued ~~million~~an ~~shares~~Order ~~remaining~~(the ~~available~~May Order) related to the Utilities’ revised annual decoupling filing for ~~future~~tariffed ~~issuance~~rates ~~under~~submitted on April 15, 2015. The May Order ruled on the ~~EIP~~specific ofmatters ~~which~~identified anby ~~estimated~~the 2PUC in its information requests and by the Consumer Advocate in its Statement of Position.6 ~~million~~As ~~shares~~a ~~could~~result beof ~~issued~~the ~~upon~~May Order, on June 3, 2015, the ~~vesting~~Utilities filed revised tariff rates reflecting a reduction to the RAM portion of ~~outstanding~~the ~~restricted~~tariff ~~stock~~filing. ~~units~~The revision was made primarily to adjust the RAM to reflect reduced operations and maintenance expenses associated with the ~~achievement~~Utilities’ change in estimate related to the allocation of ~~performance~~indirect ~~goals~~costs ~~under~~implemented ~~long-term~~in ~~incentive~~2014, ~~plans~~and ~~(based~~to exclude the GDPPI factor on the ~~assumption~~depreciation ~~that~~expense ~~long~~portion for the calculation of the 2015 RAM Cap. The May Order also requires a one-~~term~~time ~~incentive~~adjustment ~~plan~~to ~~(LTIP)~~customers ~~awards~~for ~~are~~the ~~achieved~~impact atof ~~maximum~~bonus ~~levels)~~tax depreciation enacted in December 2014 on the RAM revenues used for the 2014 tariff filing.

The revised 2015 annual incremental RAM revenues for the Utilities amounts to $11.1 million compared to the $26.2 million filed on April 15, 2015 and the $31.6 million filed on March 31, 2015 based on the methodology prior to its modification in the March Order. The tariffed rates, which became effective on June 8, 2015, also include the collection or refund of the accrued RBA balance and associated revenue taxes as of December 31, 2014 and any accrued earnings sharing mechanism credits. The net refund to be provided by the three Utilities under the revised tariffs amounts to $0.4 million, compared to a collection of $14.7 million under the tariffs filed on April 15, 2015. Below is a summary of the 2015 incremental impact by company.

Under the 1987 Stock Option and Incentive Plan, as amended (SOIP), there are possible future issuances upon the exercise of outstanding stock appreciation rights (SARs) and dividend equivalents; however, based on the market price of shares on September 30, 2013, the SARS had no intrinsic value. As of May 11, 2010 (when the EIP became effective), no new awards may be granted under the SOIP. After the shares of common stock for the outstanding SOIP grants and awards are issued or such grants and awards expire, the remaining shares registered under the SOIP will be deregistered and delisted.



($ in millions)	Hawaiian Electric			Hawaii Electric Light		Maui Electric
Annual incremental RAM adjusted revenues	$	8.1		$	1.5	$	1.5
Annual change in accrued earnings sharing credits to be refunded	$	—		$	—	$	(0.1	)
Annual change in accrued RBA balance as of December 31, 2014 (and associated revenue taxes) to be collected	$	(9.2	)	$	0.1	$	(2.2	)
Net annual incremental amount to be collected under the tariffs	$	(1.1	)	$	1.5	$	(0.8	)
Impact on typical residential customer monthly bill (in dollars) *	$	(0.09	)	$	0.88	$	(0.13	)

~~Under~~Note: ~~the~~Columns ~~2011~~may ~~Nonemployee~~not ~~Director~~foot ~~Stock~~due ~~Plan (2011 Director Plan), HEI can issue shares of common stock as compensation~~ to ~~nonemployee directors. As of September 30, 2013, there were 202,460 shares remaining available for future issuance.~~rounding

* Based on a 500 KWH bill for Hawaiian Electric, Maui Electric, and Hawaii Electric Light. The ~~Company’s~~bill ~~share-based~~impact ~~compensation~~for ~~expense~~Lanai and ~~related~~Molokai ~~income~~customers ~~tax~~is ~~benefit~~a ~~were~~decrease asof ~~follows:~~$0.11, based on a 400 KWH bill.

	Three months ended September 30				Nine months ended September 30
(in millions)	2013		2012		2013		2012
Share-based compensation expense (1)	$	2.5	$	1.4	$	6.0	$	5.4
Income tax benefit	0.9		0.5		2.2		1.9

As required by the March Order, the Parties filed initial and reply briefs related to the following issues: (1) whether, and if so, how the conventional performance incentive mechanisms proposed in this proceeding should be refined and implemented in this docket; (2) what are the appropriate steps, processes and timing for determining measures to improve the efficiency and effectiveness of the general rate case filing and review process; and (3) what are the appropriate steps, processes, and timing to further consider the merits of the proposed changes to the ECAC identified in this proceeding. In identifying the issue on possible changes to the ECAC, the PUC stated that changes to the ECAC should be made with great care to avoid unintended consequences.

~~___________________________________________~~The May Order indicates the PUC will review the change in estimate related to the allocation of indirect costs in a separate docket, and that the change will remain subject to adjustment pending the outcome of the review. Management cannot predict the outcome of this review or the further outcome of this proceeding or the ultimate impact of the proceeding on the results of operation of the Utilities or the net financial impact on the Utilities and HEI.

~~(1)~~Potential ~~The~~impact ~~Company~~of ~~has~~lava ~~not~~flows. ~~capitalized~~In ~~any~~June ~~share-based~~2014, ~~compensation~~lava ~~cost~~from the Kilauea Volcano on the island of Hawaii began flowing toward the town of Pahoa. Hawaii Electric Light monitored utility property and equipment near the affected areas and protected that

Stock awards. On June 28, 2013 and June 29, 2012, HEI granted 33,184 shares and 29,448 shares, respectively, with a fair value of $0.8 million and $0.8 million and related tax benefits of $0.3 million and $0.3 million, respectively, to HEI nonemployee directors under the 2011 Director Plan. The number of shares issued to each HEI nonemployee director is determined based on the closing price of HEI Common Stock on grant date.

Nonqualified stock options. As of December 31, 2012, nonqualified stock options (NQSOs) outstanding totaled 14,000 (representing the same number of underlying shares), with a weighted-average exercise price of $20.49. As of September 30, 2013, there were no NQSOs outstanding.

NQSO activity and statistics were as follows:

	Three months ended September 30				Nine months ended September 30
(dollars in thousands, except prices)	2013		2012		2013		2012
Shares exercised	—		8,000		14,000		41,500
Weighted-average exercise price	$	—	$	20.49	$	20.49	$	21.06
Cash received from exercise	$	—	$	164	$	287	$	874
Intrinsic value of shares exercised (1)	$	—	$	89	$	128	$	354
Tax benefit realized for the deduction of exercises	$	—	$	35	$	50	$	138

___________________________________________

(1) Intrinsic value is the amount by which the fair market value of the underlying stock and the related dividend equivalents exceeds the exercise price of the option.

~~Stock~~property ~~appreciation~~and ~~rights~~equipment to the extent possible (e. ~~Information~~g., ~~about~~building ~~HEI’s~~barriers ~~SARs~~around ~~was~~poles). asIn ~~follows:~~March 2015 Hawaii Electric Light filed an application with the PUC requesting approval to defer costs incurred by the Company to monitor, prepare for, respond to, and take other actions necessary in connection with the June 2014 Kilauea lava flow such that the Company can request PUC approval to recover those costs in a future rate case. The PUC approved a procedural schedule for this application and the parties are currently conducting discovery.

September 30, 2013		Outstanding & Exercisable (Vested)
Year ofgrant	Range ofexercise prices	Number of sharesunderlying SARs	Weighted-averageremainingcontractual life	Weighted-averageexercise price
2004	$26.02	62,000	0.6	$	26.02
2005	26.18	102,000	1.5	26.18
	$26.02-26.18	164,000	1.2	$	26.12

April 2014 regulatory orders. In April 2014, the PUC issued four orders that collectively address certain key policy, resource planning and operational issues for the Utilities. The four orders are as follows:

AsIntegrated ofResource ~~December 31~~Planning. The PUC did not accept the Utilities’ Integrated Resource Plan and Action Plans submission, ~~2012~~and, in lieu of an approved plan, has commenced other initiatives to enable resource planning. The PUC also terminated the ~~shares~~Utilities’ ~~underlying~~integrated ~~SARs~~resource ~~outstanding~~planning ~~totaled~~(IRP) ~~164~~cycle,~~000,~~ ~~with~~including the filing of a ~~weighted~~mid-~~average~~cycle ~~exercise~~evaluation ~~price~~report, ofand ~~$26~~formally concluded the IRP advisory group.~~12.~~ AsThe PUC directed each of ~~September 30~~Hawaiian Electric and Maui Electric to file within 120 days its respective Power Supply Improvement Plans (PSIPs), ~~2013~~and the PSIPs were filed in August 2014. The PUC also provided its inclinations on the future of Hawaii’s electric utilities in an exhibit to the order. The exhibit provides the PUC’s perspectives on the vision, ~~all~~business ~~SARs~~strategies ~~outstanding~~and ~~were~~regulatory ~~exercisable~~policy changes required to align the Utilities’ business model with customers’ interests and ~~had~~the nostate’s ~~aggregate~~public ~~intrinsic~~policy ~~value~~goals.

~~SARs~~Reliability ~~activity~~Standards Working Group. The PUC ordered the Utilities (and ~~statistics~~in ~~were~~some ascases ~~follows~~the Kauai Island Utility Cooperative (KIUC)) to take timely actions intended to lower energy costs, improve system reliability and address emerging challenges to integrate additional renewable energy. In addition to the PSIPs mentioned above, the PUC ordered certain filing requirements which include the following:

	Three months ended September 30			Nine months ended September 30
(dollars in thousands, except prices)	2013	2012		2013	2012
Shares underlying SARS exercised	—	2,000		—	114,000
Weighted-average price of shares exercised	—	$	26.18	—	$	26.17
Intrinsic value of shares exercised (1)	—	$	3	—	$	197
Tax benefit realized for the deduction of exercises	—	$	1	—	$	77


•	Distributed Generation Interconnection Plan to be filed within 120 days. The Utilities’ Plan was filed in August 2014.

~~___________________________________________~~• Plan to implement an on-going distribution circuit monitoring program to measure real-time voltage and other power quality parameters to be filed within 60 days. The plan shall achieve full implementation of the distribution circuit monitoring program within 180 days. The Utilities’ Plan was filed in June 2014.

~~(1)~~• ~~Intrinsic~~Action ~~value~~Plan isfor ~~the~~improving ~~amount~~efficiencies byin ~~which~~ the ~~fair~~interconnection ~~market~~requirements ~~value~~studies ofto ~~the~~be ~~underlying~~filed ~~stock~~within ~~and~~30 ~~the~~days. ~~related~~The ~~dividend~~Utilities’ ~~equivalent~~Plan ~~rights~~was ~~exceeds~~filed ~~the~~in ~~exercise~~May ~~price of the right~~2014.

~~Restricted~~• ~~shares~~The ~~and~~Utilities ~~restricted~~are ~~stock~~to ~~awards. Information~~file ~~about~~monthly ~~HEI’s~~reports ~~grants~~providing ofdetails ~~restricted~~about ~~shares~~interconnection ~~and~~requirements ~~restricted stock awards was as follows:~~studies.

	Three months ended September 30							Nine months ended September 30
	2013			2012				2013			2012
	Shares	(1)		Shares		(1)		Shares	(1)		Shares		(1)
Outstanding, beginning of period	9,005	$	22.21	14,807		$	22.45	9,005	$	22.21	46,807		$	24.45
Granted	—	—		—		—		—	—		—		—
Vested	—	—		(1,000	)	24.68		—	—		(33,000	)	25.35
Forfeited	—	—		—		—		—	—		—		—
Outstanding, end of period	9,005	$	22.21	13,807		$	22.29	9,005	$	22.21	13,807		$	22.29


•	Proposal to implement an integrated interconnection queue for each distribution circuit for each island grid to be filed within 120 days. The Utilities’ integrated interconnection queue plan was filed in August 2014 and the integrated interconnection queues were implemented in January 2015.

~~___________________________________________~~The PUC also stated it would be opening new dockets to address (1) reliability standards, (2) the technical, economic and policy issues associated with distributed energy resources and (3) the Hawaii electricity reliability administrator, which is a third party position which the legislature has authorized the PUC to create by contract to provide support for the PUC in developing and periodically updating local grid reliability standards and procedures and interconnection requirements and overseeing grid access and operation.

~~(1)~~Policy ~~Weighted-average~~Statement ~~grant-date~~and ~~fair~~Order ~~value~~Regarding ~~per~~Demand ~~share~~Response ~~based~~Programs. The onPUC provided guidance concerning the ~~closing~~objectives orand ~~average~~goals ~~price~~for ofdemand ~~HEI~~response ~~common~~programs, ~~stock~~and ordered the Utilities to develop within 90 days an integrated Demand Response Portfolio Plan that will enhance system operations and reduce costs to customers. The Utilities’ Plan was filed in July 2014. In August 2014, the PUC invited public comment on the ~~date~~Utilities’ ofPlan. ~~grant~~The Utilities submitted a status update in October 2014, and a second status update was filed with the PUC in March 2015. On July 28, 2015, the PUC issued an order appointing a special advisor to guide, monitor, and review the Utility’s Plan design and implementation.

AsMaui ofElectric Company 2012 Test Year Rate Case. The PUC acknowledged the extensive analyses provided by Maui Electric in its System Improvement and Curtailment Reduction Plan (SICRP) filed in September ~~30,~~ 2013. The PUC stated that it is encouraged by the changes in Maui Electric’s operations that have led to a significant reduction in the curtailment of renewables, ~~there~~but ~~was~~stated ~~$0.1~~that ~~million~~Maui Electric has not set forth a clearly defined path that addresses integration and curtailment of ~~total~~additional ~~unrecognized~~renewables. ~~compensation~~The ~~cost~~PUC ~~related~~directed Maui Electric to ~~nonvested~~present ~~restricted~~a ~~shares~~PSIP within 120 days to address present and ~~restricted~~future ~~stock~~system ~~awards~~operations so as to not only reduce curtailment, but to optimize the operation of its system for its customers’ benefit. The ~~cost~~Maui isElectric ~~expected~~PSIP towas filed in August 2014, and will be ~~recognized~~reviewed ~~over~~by the PUC in a ~~weighted-average~~new ~~period~~docket ofalong 1with the Hawaiian Electric and Hawaii Electric Light PSIPs.2 ~~years~~Maui Electric filed its first annual SICRP status update in September 2014.

~~For~~Review ~~the first nine months~~ of ~~2012~~PSIPs. Collectively, ~~total~~the ~~restricted~~PUC’s ~~stock~~April ~~vested~~2014 ~~had~~resource aplanning ~~grant-date~~orders ~~fair~~confirm ~~value~~the ofenergy ~~$0.8~~policy ~~million~~ and ~~the~~operational ~~tax~~priorities ~~benefits~~that ~~realized~~will ~~for~~guide ~~tax~~the ~~deductions~~Utilities’ ~~related~~strategies toand ~~restricted~~plans ~~stock~~going ~~awards were $0~~forward.~~2 million.~~

PSIPs for Hawaiian Electric, Maui Electric and Hawaii Electric Light (updating its Power Supply Plan filed in April 2014) were filed in August 2014. The PSIPs each include a tactical plan to transform how electric utility services will be offered to meet customer needs and produce higher levels of renewable energy. Each plan contains a diversified mix of technologies,

~~Restricted~~including ~~stock~~significant ~~units. Information~~distributed ~~about~~and ~~HEI~~utility‑scale renewable resources, that is expected to result, on a consolidated basis, in over 65% of the Utilities’s ~~grants~~energy being produced from renewable resources by 2030. Under these plans, the Utilities will support sustainable growth of ~~restricted~~rooftop ~~stock~~solar, ~~units~~expand ~~was~~use asof ~~follows:~~energy storage systems, empower customers by developing smart grids, offer new products and services to customers (e.g., community solar, microgrids and voluntary “demand response” programs), switch from high-priced oil to lower cost liquefied natural gas, retire higher-cost, less efficient existing oil-based steam generators, and lower full service residential customer bills in real dollars.

	Three months ended September 30										Nine months ended September 30
	2013					2012					2013					2012
	Shares			(1)		Shares			(1)		Shares			(1)		Shares			(1)
Outstanding, beginning of period	300,313			$	25.15	319,071			$	22.81	315,094			$	22.82	247,286			$	21.80
Granted	4,000			26.48		—			—		111,231			26.88		94,846			26.00
Vested	(2,500		)	22.31		(2,500		)	22.31		(116,544		)	20.39		(23,997		)	24.69
Forfeited	(11,321		)	25.88		(3,346		)	24.63		(19,289		)	25.62		(4,910		)	24.92
Outstanding, end of period	290,492			$	25.16	313,225			$	22.80	290,492			$	25.16	313,225			$	22.80
	$ millions					$ millions					$ millions					$ millions
Total weighted-average grant-date fair value of shares granted	$	0.1				$	—				$	3.0				$	2.5

The PSIPs will be reviewed by the PUC in a new docket, and a number of parties have moved to intervene in the proceeding. In September 2014, the PUC invited the public to comment on the PSIPs. In October 2014, the Utilities filed responses to information requests on the PSIPs from the PUC.

~~___________________________________________~~Transitional Distributed Generation Tariff. Consistent with their Distributed Generation Interconnection Plan, on January 20, 2015, the Utilities filed a motion which requested the PUC in pertinent part to:

(1) Reinstitute ~~Weighted-average~~a ~~grant-date~~program ~~fair~~capacity ~~value~~threshold ~~per~~for ~~share based on~~ the ~~average~~Utilities' ~~price~~existing ofNet ~~HEI~~Energy ~~common~~Metering ~~stock~~(NEM) ~~on the date of grant.~~program;

~~As of September 30, 2013, there was $4.~~(2) Approve ~~million~~the ofUtilities’ ~~total~~proposal ~~unrecognized compensation cost related~~ to ~~the~~address ~~nonvested~~both ~~restricted~~existing ~~stock~~NEM ~~units.~~program ~~The~~participants ~~cost~~and isthose ~~expected~~customers topresently beawaiting ~~recognized~~interconnection ~~over~~approval aunder ~~weighted-average~~the ~~period~~existing ofNEM ~~2.5 years.~~program;

~~For~~(3) Approve ~~the~~a ~~first~~new ~~nine~~Transitional ~~months~~Distributed ofGeneration ~~2013~~(TDG) ~~and~~tariff ~~2012,~~to ~~total~~be ~~restricted~~available ~~stock~~to ~~units~~customers ~~that~~seeking ~~vested~~interconnection ~~and~~after ~~related~~the ~~dividends~~NEM ~~had~~program acapacity ~~grant-date~~is ~~fair~~reached, ~~value~~which oftariff ~~$3.6~~more ~~million~~fairly ~~and~~allocates ~~$0.7~~fixed ~~million,~~grid ~~respectively,~~costs to DG customers and credits customers for the ~~related~~value ~~tax~~of ~~benefits~~the ~~were~~excess ~~$1.0~~energy ~~million~~produced ~~and~~by ~~$0.2~~their ~~million,~~systems; ~~respectively.~~and

~~LTIP~~(4) Approve ~~payable~~a innew ~~stock. The~~standard ~~2011-2013~~form ~~LTIP,~~TDG ~~2012-2014~~contract LTIP and the 2013-2015 LTIP provide for performance awards under the EIP of shares of HEI common stock based on the satisfaction of performance goals and service conditions. The number of shares of HEI common stock that may be awarded is fixed on the date the grants are made subject to ~~the~~allow ~~achievement of specified performance levels. The potential payout varies from 0% to 200% of the number of target shares depending on achievement of the goals. The LTIP performance goals~~ for the ~~LTIP~~advanced ~~periods~~technical ~~include~~capabilities ~~awards~~required ~~with a market goal based on total return~~ to ~~shareholders~~integrate ~~(TRS)~~higher of HEI stock as a percentile to the Edison Electric Institute Index over the applicable three-year period. In addition, the 2011-2013 LTIP, the 2012-2014 LTIP and the 2013-2015 LTIP have performance goals related to levels of ~~HEI~~distributed consolidated net income, HEI consolidated return on common equity (ROACE), Hawaiian Electric consolidated net income, Hawaiian Electric consolidated ROACE, ASB net income and ASB return on assets — all based on the applicable three-year averagesgeneration.

~~LTIP~~Once ~~linked~~the requests in the motion are approved, it is contemplated that the Utilities will be able to ~~TRS~~increase existing circuit penetration limits based upon daytime minimum load, and identify strategic and cost effective investments to circuits and the system to support increased levels of DG. ~~Information~~ ~~about~~Such ~~HEI’s~~investments ~~LTIP~~would ~~grants~~be ~~linked~~made for the benefit of all customers rather than charging costs only to ~~TRS~~those ~~was~~installing asDG ~~follows:~~systems on the circuit.

	Three months ended September 30										Nine months ended September 30
	2013					2012					2013					2012
	Shares			(1)		Shares			(1)		Shares			(1)		Shares			(1)
Outstanding, beginning of period	235,064			$	32.87	239,407			$	29.12	239,256			$	29.12	197,385			$	25.94
Granted	1,505			32.69		1,723			30.71		91,038			32.69		80,647			30.71
Vested (settled or lapsed)	—			—		—			—		(87,753		)	22.45		(35,397		)	14.85
Forfeited	(4,442		)	32.40		(2,450		)	31.09		(10,414		)	32.72		(3,955		)	30.82
Outstanding, end of period	232,127			$	32.88	238,680			$	29.11	232,127			$	32.88	238,680			$	29.11
	$ millions					$ millions					$ millions					$ millions
Total weighted-average grant-date fair value of shares granted	$	—				$	0.1				$	3.0				$	2.5

The Utilities had requested approval of their motion within 60 days of filing or by March 20, 2015. However, pursuant to the PUC order described in the following section, the PUC declined to rule on this request.

~~___________________________________________~~Distributed Energy Resources (DER) Investigative Proceeding. Consistent with the PUC’s plan to review the technical, economic and policy issues associated with distributed energy resources as noted in the Reliability Standards Working Group order, in March 2015, the PUC issued an order to address DER issues. The PUC order:

(1) ~~Weighted-average~~Allowed ~~grant-date~~intervention ~~fair~~to ~~value~~ten ~~per~~parties ~~share~~in ~~determined~~the ~~using a Monte Carlo simulation model.~~proceeding,


(2)	Consolidated portions of two other proceedings related to rules on interconnection of distributed generating facilities with the Utilities system,


(3)	Declined to rule on distributed generation interconnection plan filed in August 2014 as a result of the Reliability Standards Working Group order,


(4)	Declined to rule on Utilities’ TDG motion, filed on January 20, 2015, and instead, directed the parties to collaborate on a “Transition Plan” from existing DER programs, including NEM, to a longer-term DER market structure;


(5)	Ordered the parties to collaborate on issues through a series of bi-weekly technical sessions;


(6)	Issued a Statement of Issues and a Procedural Schedule for the docket that directs the parties to file stipulations on areas of agreement, or separate statements of positions on issues where agreement cannot be reached, by June 29, 2015; and


(7)	Ordered the Utilities to submit weekly reports documenting progress on clearing interconnection applications, and monthly reports on the status of key technical developments to enable DER market growth.

In addition, the PUC provided further clarifications and guidance from their Staff’s perspective on important issues relating to the growth of DER in the State.

On June 29, 2015, the Utilities submitted their final Statement of Position in the DER proceeding, which included:


(1)	new pricing provisions for future rooftop PV systems,


(2)	technical standards for advanced inverters,


(3)	new options for customers including battery-equipped rooftop PV systems,

~~The~~(4) ~~following~~a ~~table~~pilot ~~summarizes the assumptions used to determine the fair value~~ time-of-use ~~the LTIP awards linked to TRS and the resulting fair value of LTIP awards granted:~~rate,

	2013			2012
Risk-free interest rate	0.38		%	0.33		%
Expected life in years	3			3
Expected volatility	19.4		%	25.3		%
Range of expected volatility for Peer Group	12.4% to 25.3%			15.5% to 34.5%
Grant date fair value (per share)	$	32.69		$	30.71


(5)	an improved method of calculating the amount of rooftop PV that can be safely installed, and

~~For~~(6) ~~the nine months ended September 30, 2013 and 2012, total vested LTIP awards linked to TRS and related dividends had~~ a ~~fair~~streamlined ~~value of $2.2 million~~ and ~~$0.6~~standardized ~~million,~~PV ~~respectively,~~application ~~and the related tax benefits were $0~~process.9 million and $0.2 million, respectively. Of the 87,753 shares vested and granted (at target level based on the satisfaction of TRS performance) for the 2010-2012 LTIP, the HEI Compensation Committee approved settlement of 70,205 shares of HEI common stock in February 2013 (17,548 of the vested shares lapsed).

AsManagement ofcannot ~~September 30,~~predict ~~2013,~~the ~~there~~outcome ~~was~~of ~~$2.9~~the ~~million~~proceedings ofto ~~total~~review ~~unrecognized~~the ~~compensation~~Plans ~~cost~~submitted ~~related~~in response to the ~~nonvested~~PUC’s ~~performance~~April ~~awards~~2014 ~~payable~~resource inplanning ~~shares~~orders, ~~linked~~the toDER ~~TRS.~~Investigative ~~The~~Proceeding ~~cost~~or isthe ~~expected~~ultimate toimpact beof ~~recognized~~the ~~over~~proceedings aon ~~weighted-average~~the ~~period~~results of ~~1.3~~operations ~~years~~of the Utilities.

~~LTIP~~Consolidating ~~awards~~financial ~~linked~~information. Hawaiian Electric is not required to provide separate financial statements or other ~~performance~~disclosures ~~conditions. Information~~concerning ~~about~~Hawaii ~~HEI’s~~Electric ~~LTIP~~Light ~~awards~~and ~~payable~~Maui inElectric ~~shares~~to ~~linked~~holders of the 2004 Debentures issued by Hawaii Electric Light and Maui Electric to ~~other~~Trust ~~performance~~III ~~conditions~~since ~~was~~all of their voting capital stock is owned, and their obligations with respect to these securities have been fully and unconditionally guaranteed, on a subordinated basis, by Hawaiian Electric. Consolidating information is provided below for Hawaiian Electric and each of its subsidiaries for the periods ended and as ~~follows:~~of the dates indicated.

	Three months ended September 30										Nine months ended September 30
	2013					2012					2013					2012
	Shares			(1)		Shares			(1)		Shares			(1)		Shares			(1)
Outstanding, beginning of period	304,473			$	26.12	295,184			$	23.95	247,175			$	25.04	182,498			$	22.63
Granted	1,504			27.11		4,148			27.30		120,399			26.89		122,852			26.05
Vested and settled	—			—		—			—		(18,280		)	18.95		—			—
Cancelled	—			—		(17,911		)	18.95		(37,346		)	24.96		(17,911		)	18.95
Forfeited	(4,881		)	26.53		(3,676		)	24.78		(10,852		)	26.20		(9,694		)	24.44
Outstanding, end of period	301,096			$	26.12	277,745			$	24.31	301,096			$	26.12	277,745			$	24.31
	$ millions					$ millions					$ millions					$ millions
Total weighted-average grant-date fair value of shares granted (at target performance levels)	$	—				$	0.1				$	3.2				$	3.2

Hawaiian Electric also unconditionally guarantees Hawaii Electric Light’s and Maui Electric’s obligations (a) to the State of Hawaii for the repayment of principal and interest on Special Purpose Revenue Bonds issued for the benefit of Hawaii Electric Light and Maui Electric, (b) under their respective private placement note agreements and the Hawaii Electric Light notes and Maui Electric notes issued thereunder and (c) relating to the trust preferred securities of Trust III. Hawaiian Electric is also obligated, after the satisfaction of its obligations on its own preferred stock, to make dividend, redemption and liquidation payments on Hawaii Electric Light’s and Maui Electric’s preferred stock if the respective subsidiary is unable to make such payments.

___________________________________________

(1) Weighted-average grant-date fair value per share based on the average price of HEI common stock on the date of grant.

For the nine months ended September 30, 2013, total vested LTIP awards linked to other performance conditions and related dividends had a fair value of $0.6 million and the related tax benefits were $0.2 million.

As of September 30, 2013, there was $3.7 million of total unrecognized compensation cost related to the nonvested shares linked to performance conditions other than TRS. The cost is expected to be recognized over a weighted-average period of 1.4 years.

7Hawaiian ·Electric ~~Earnings~~Company, Inc. ~~per share~~ and ~~shareholders’ equity~~Subsidiaries

~~Earnings~~Consolidating ~~per~~Statement ~~share. Under the two-class method~~ of ~~computing~~Income ~~earnings per share~~ (~~EPS~~unaudited)~~, EPS was comprised as follows for both participating securities and unrestricted common stock:~~

	Three months ended September 30					Nine months ended September 30
	2013			2012		2013				2012
	Basic		Diluted	Basic anddiluted		Basic		Diluted		Basic anddiluted
Distributed earnings	$	0.31	0.31	$	0.31	$	0.93	$	0.93	$	0.93
Undistributed earnings	0.18		0.17	0.18		0.31		0.30		0.36
	$	0.49	0.48	$	0.49	$	1.24	$	1.23	$	1.29

Three months ended June 30, 2015

As of September 30, 2013, the antidilutive effects of SARs of 164,000 shares of HEI common stock for which the exercise prices were greater than the closing market price of HEI’s common stock were not included in the computation of dilutive EPS. As of September 30, 2012, there were no shares that were antidilutive.



(in thousands)	Hawaiian Electric			Hawaii Electric Light		Maui Electric		Other subsidiaries	Consolidating adjustments		Hawaiian Electric Consolidated
Revenues	$	391,007		83,732		83,442		—	(18	)	$	558,163
Expenses
Fuel oil	104,278			16,241		25,712		—	—		146,231
Purchased power	107,370			24,555		17,359		—	—		149,284
Other operation and maintenance	66,428			16,158		16,278		—	—		98,864
Depreciation	29,389			9,312		5,540		—	—		44,241
Taxes, other than income taxes	37,479			7,944		7,959		—	—		53,382
Total expenses	344,944			74,210		72,848		—	—		492,002
Operating income	46,063			9,522		10,594		—	(18	)	66,161
Allowance for equity funds used during construction	1,581			165		150		—	—		1,896
Equity in earnings of subsidiaries	9,624			—		—		—	(9,624	)	—
Interest expense and other charges, net	(11,290		)	(2,592	)	(2,424	)	—	18		(16,288		)
Allowance for borrowed funds used during construction	564			58		60		—	—		682
Income before income taxes	46,542			7,153		8,380		—	(9,624	)	52,451
Income taxes	13,431			2,536		3,144		—	—		19,111
Net income	33,111			4,617		5,236		—	(9,624	)	33,340
Preferred stock dividends of subsidiaries	—			133		96		—	—		229
Net income attributable to Hawaiian Electric	33,111			4,484		5,140		—	(9,624	)	33,111
Preferred stock dividends of Hawaiian Electric	270			—		—		—	—		270
Net income for common stock	$	32,841		4,484		5,140		—	(9,624	)	$	32,841

~~Shareholders’~~Hawaiian ~~equity~~Electric Company, Inc. and Subsidiaries

~~Equity~~Consolidating ~~forward~~Statement ~~transaction. On March 19, 2013, HEI entered into an equity forward transaction in connection with a public offering on that date~~ of ~~6.1~~Comprehensive ~~million~~Income ~~shares~~(Loss) of HEI common stock at $26.75 per share. On March 19, 2013, HEI common stock closed at $27.01 per share. On March 20, 2013, the underwriters exercised their over-allotment option in full and HEI entered into an equity forward transaction in connection with the resulting additional 0.9 million shares of HEI common stock.(unaudited)

~~The~~Three ~~use~~months ofended anJune ~~equity forward transaction substantially eliminates future equity market price risk by fixing a common equity offering sales price under the then existing market conditions~~30, while mitigating immediate share dilution resulting from the offering by postponing the actual issuance of common stock until funds are needed in accordance with the Company’s capital investment plans. Pursuant to the terms of these transactions, a forward counterparty borrowed 7 million shares of HEI’s common stock from third parties and sold them to a group of underwriters for $26.75 per share, less an underwriting discount equal to $1.00312 per share. Under the terms of the equity forward transactions, to the extent that the transactions are physically settled, HEI would be required to issue and deliver shares of HEI common stock to the forward counterparty at the then applicable forward sale price. The forward sale price was initially determined to be $25.74688 per share at the time the equity forward transactions were entered into, and the amount of cash to be received by HEI upon physical settlement of the equity forward is subject to certain adjustments in accordance with the terms of the equity forward transactions. The equity forward transactions must be settled fully by March 25, 2015. Except in specified circumstances or events that would require physical settlement, HEI is able to elect to settle the equity forward transactions by means of physical, cash or net share settlement, in whole or in part, at any time on or prior to March 25, 2015.

The equity forward transactions had no initial fair value since they were entered into at the then market price of the common stock. HEI will not receive any proceeds from the sale of common stock until the equity forward transactions are settled, and at that time HEI will record the proceeds, if any, in equity. HEI concluded that the equity forward transactions were equity instruments based on the accounting guidance in ASC 480 and ASC 815 and that they qualified for an exception from derivative accounting under ASC 815 because the forward sale transactions were indexed to its own stock. HEI anticipates settling the equity forward transactions through physical settlement.



(in thousands)	Hawaiian Electric			Hawaii Electric Light		Maui Electric		Other subsidiaries	Consolidating adjustments		Hawaiian Electric Consolidated
Net income for common stock	$	32,841		4,484		5,140		—	(9,624	)	$	32,841
Other comprehensive income (loss), net of taxes:
Retirement benefit plans:
Less: amortization of prior service credit and net losses recognized during the period in net periodic benefit cost, net of tax benefits	5,257			713		652		—	(1,365	)	5,257
Less: reclassification adjustment for impact of D&Os of the PUC included in regulatory assets, net of taxes	(5,272		)	(716	)	(655	)	—	1,371		(5,272		)
Other comprehensive income (loss), net of taxes	(15		)	(3	)	(3	)	—	6		(15		)
Comprehensive income attributable to common shareholder	$	32,826		4,481		5,137		—	(9,618	)	$	32,826

At September 30, 2013, the equity forward transactions could have been settled with physical delivery of the shares to the forward counterparty in exchange for cash of $175 million. At September 30, 2013, the equity forward transactions could also have been cash settled, with delivery of cash of approximately $6 million (which amount includes $7 million of underwriting discount) to the forward counterparty, or net share settled with delivery of approximately 212,000 shares of common stock to the forward counterparty.

Prior to their settlement, the equity forward transactions will be reflected in HEI’s diluted earnings per share calculations using the treasury stock method. Under this method, the number of shares of HEI’s common stock used in calculating diluted earnings per share for a reporting period would be increased by the number of shares, if any, that would be issued upon physical settlement of the equity forward transactions less the number of shares that could be purchased by HEI in the market (based on the average market price during that reporting period) using the proceeds receivable upon settlement of the equity forward

~~transactions~~Hawaiian ~~(based~~Electric ~~on the adjusted forward sale price at the end of that reporting period)~~Company, Inc. ~~The~~and ~~excess number of shares is weighted for the portion of the reporting period in which the equity forward transactions are outstanding.~~Subsidiaries

~~Accordingly,~~Consolidating ~~before~~Statement ~~physical or net share settlement~~ of ~~the~~Income equity forward transactions, and subject to the occurrence of certain events, HEI anticipates that the forward sale agreement and additional forward sale agreement will have a dilutive effect on HEI’s earnings per share only during periods when the applicable average market price per share of HEI’s common stock is above the per share adjusted forward sale price, as described above. However, if HEI decides to physically or net share settle the forward sale agreement and additional forward sale agreement, any delivery by HEI of shares upon settlement could result in dilution to HEI’s earnings per share.(unaudited)

~~For~~Three ~~the nine~~ months ended ~~September~~ June 30, ~~2013,~~2014 ~~the equity forward transactions did not have a material dilutive effect on HEI’s earnings per share.~~

Accumulated other comprehensive income. Reclassifications out of accumulated other comprehensive income/(loss) (AOCI) were as follows:



(in thousands)	Hawaiian Electric			Hawaii Electric Light		Maui Electric		Other subsidiaries	Consolidating adjustments		Hawaiian Electric Consolidated
Revenues	$	530,991		103,544		103,916		—	(22	)	$	738,429
Expenses
Fuel oil	195,549			31,179		43,529		—	—		270,257
Purchased power	140,805			28,170		19,348		—	—		188,323
Other operation and maintenance	68,992			14,817		14,755		—	—		98,564
Depreciation	27,300			8,976		5,317		—	—		41,593
Taxes, other than income taxes	49,949			9,757		9,918		—	—		69,624
Total expenses	482,595			92,899		92,867		—	—		668,361
Operating income	48,396			10,645		11,049		—	(22	)	70,068
Allowance for equity funds used during construction	1,417			121		(151	)	—	—		1,387
Equity in earnings of subsidiaries	9,859			—		—		—	(9,859	)	—
Interest expense and other charges, net	(11,553		)	(2,852	)	(2,469	)	—	22		(16,852		)
Allowance for borrowed funds used during construction	535			47		(59	)	—	—		523
Income before income taxes	48,654			7,961		8,370		—	(9,859	)	55,126
Income taxes	14,154			2,982		3,261		—	—		20,397
Net income	34,500			4,979		5,109		—	(9,859	)	34,729
Preferred stock dividends of subsidiaries	—			133		96		—	—		229
Net income attributable to Hawaiian Electric	34,500			4,846		5,013		—	(9,859	)	34,500
Preferred stock dividends of Hawaiian Electric	270			—		—		—	—		270
Net income for common stock	$	34,230		4,846		5,013		—	(9,859	)	$	34,230

	Amount reclassified from AOCI
	Three months ended September 30						Nine months ended September 30
(in thousands)	2013			2012			2013			2012			Affected line item in the Statement of Income
Net realized gains on securities	$	—		$	—		$	(738	)	$	(81	)	Revenues-bank (net gains on sales of securities)
Derivatives qualified as cash flow hedges
Interest rate contracts (settled in 2011)	59			59			177			177			Interest expense
Retirement benefit plan items
Amortization of transition obligation, prior service credit and net losses recognized during the period in net periodic benefit cost	5,789			3,826			17,490			11,467			See Note 5 for additional details
Less: reclassification adjustment for impact of D&Os of the PUC included in regulatory assets	(5,156		)	(3,342		)	(15,468		)	(10,026		)	See Note 5 for additional details
Total reclassifications	$	692		$	543		$	1,461		$	1,537

Hawaiian Electric Company, Inc. and Subsidiaries

8Consolidating ·Statement ~~Commitments~~of ~~and~~Comprehensive ~~contingencies~~Income (unaudited)

~~See~~Three ~~Note~~months 4,ended ~~“Bank~~June ~~subsidiary~~30,” ~~above~~2014 ~~and Note 5, “Commitments and contingencies,” of Hawaiian Electric’s “Notes to Consolidated Financial Statements,” below.~~

9 · Fair value measurements



(in thousands)	Hawaiian Electric			Hawaii Electric Light		Maui Electric		Other subsidiaries	Consolidating adjustments		Hawaiian Electric Consolidated
Net income for common stock	$	34,230		4,846		5,013		—	(9,859	)	$	34,230
Other comprehensive income, net of taxes:
Retirement benefit plans:
Less: amortization of transition obligation, prior service credit and net losses recognized during the period in net periodic benefit cost, net of tax benefits	2,588			292		292		—	(584	)	2,588
Less: reclassification adjustment for impact of D&Os of the PUC included in regulatory assets, net of taxes	(2,575		)	(292	)	(292	)	—	584		(2,575		)
Other comprehensive income, net of taxes	13			—		—		—	—		13
Comprehensive income attributable to common shareholder	$	34,243		4,846		5,013		—	(9,859	)	$	34,243

Fair value estimates are based on the price that would be received to sell an asset, or paid upon the transfer of a liability, in an orderly transaction between market participants at the measurement date. The fair value estimates are generally determined based on assumptions that market participants would use in pricing the asset or liability and are based on market data obtained from independent sources. However, in certain cases, the Company uses its own assumptions about market participant assumptions based on the best information available in the circumstances. These valuations are estimates at a specific point in time, based on relevant market information, information about the financial instrument and judgments regarding future expected loss experience, economic conditions, risk characteristics of various financial instruments and other factors. These estimates do not reflect any premium or discount that could result if the Company were to sell its entire holdings of a particular financial instrument at one time. Because no active trading market exists for a portion of the Company’s financial instruments, fair value estimates cannot be determined with precision. Changes in the underlying assumptions used, including discount rates and estimates of future cash flows, could significantly affect the estimates. In addition, the tax ramifications related to the realization of the unrealized gains and losses could have a significant effect on fair value estimates, but have not been considered in making such estimates.

~~The~~Hawaiian Electric Company, Inc. ~~groups~~and ~~its financial assets measured at fair value in three levels outlined as follows:~~Subsidiaries

~~Level~~Consolidating ~~1: Inputs~~Statement ~~to the valuation methodology are quoted prices, unadjusted, for identical assets or liabilities in active markets. A quoted price in an active market provides the most reliable evidence~~ of ~~fair~~Income ~~value and is used to measure fair value whenever available.~~(unaudited)

~~Level~~Six ~~2: Inputs~~months toended ~~the~~June ~~valuation~~30, methodology include quoted prices for similar assets or liabilities in active markets; inputs to the valuation methodology include quoted prices for identical or similar assets or liabilities in markets that are not active; or inputs to the valuation methodology that are derived principally from or can be corroborated by observable market data by correlation or other means.2015

Level 3: Inputs to the valuation methodology are unobservable and significant to the fair value measurement. Level 3 assets and liabilities include financial instruments whose value is determined using discounted cash flow methodologies, as well as instruments for which the determination of fair value requires significant management judgment or estimation.



(in thousands)	Hawaiian Electric			Hawaii Electric Light		Maui Electric		Other subsidiaries	Consolidating adjustments		Hawaiian Electric Consolidated
Revenues	$	790,748		171,787		169,116		—	(46	)	$	1,131,605
Expenses
Fuel oil	222,681			39,626		60,730		—	—		323,037
Purchased power	210,620			46,448		28,223		—	—		285,291
Other operation and maintenance	136,512			32,557		33,797		—	—		202,866
Depreciation	58,778			18,625		11,081		—	—		88,484
Taxes, other than income taxes	75,680			16,328		16,122		—	—		108,130
Total expenses	704,271			153,584		149,953		—	—		1,007,808
Operating income	86,477			18,203		19,163		—	(46	)	123,797
Allowance for equity funds used during construction	2,704			310		295		—	—		3,309
Equity in earnings of subsidiaries	17,316			—		—		—	(17,316	)	—
Interest expense and other charges, net	(22,528		)	(5,272	)	(4,859	)	—	46		(32,613		)
Allowance for borrowed funds used during construction	952			111		118		—	—		1,181
Income before income taxes	84,921			13,352		14,717		—	(17,316	)	95,674
Income taxes	24,666			4,813		5,482		—	—		34,961
Net income	60,255			8,539		9,235		—	(17,316	)	60,713
Preferred stock dividends of subsidiaries	—			267		191		—	—		458
Net income attributable to Hawaiian Electric	60,255			8,272		9,044		—	(17,316	)	60,255
Preferred stock dividends of Hawaiian Electric	540			—		—		—	—		540
Net income for common stock	$	59,715		8,272		9,044		—	(17,316	)	$	59,715

~~The~~Hawaiian Electric Company, Inc. ~~used the following methods~~ and ~~assumptions to estimate the fair value of each applicable class of financial instruments for which it is practicable to estimate that value:~~Subsidiaries

~~Short~~Consolidating ~~term~~Statement ~~borrowings—other than bank. The carrying amount approximated fair value because~~ of ~~the~~Comprehensive ~~short~~Income ~~maturity~~(Loss) ~~of these instruments.~~(unaudited)

~~Investment~~Six ~~and~~months ~~mortgage-related~~ended ~~securities. To~~June ~~determine the fair value of investment securities held in ASB’s available-for-sale portfolio~~30, ~~independent~~2015 third-party vendor or broker pricing is used on an unadjusted basis. Prices for investments and mortgage-related securities are based on observable inputs, including historical trading levels or sector yields, using market-based valuation techniques. The third party pricing service uses applications, models and pricing matrices that correlate security prices to benchmark securities which are adjusted for various inputs. Inputs include: benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark security bids and offers, TBA (to be announced) prices, monthly payment information, and reference data including market research. The pricing service may prioritize inputs differently on any given day for any security, and not all inputs are available for use in the evaluation process on any given day or for each security. The pricing vendor corroborates its finding on an on-going basis by monitoring market activity and events.

Third party pricing services provide security prices in good faith using rigorous methodologies; however, they do not warrant or guarantee the adequacy or accuracy of their information. Therefore, ASB utilizes a separate third party pricing vendor to corroborate security pricing of the first pricing vendor. If the pricing differential between the two pricing sources exceeds an established threshold, a pricing inquiry will be sent to both vendors or to an independent broker to determine a price that can be supported based on observable inputs found in the market. Such challenges to pricing are required infrequently and are generally resolved using additional security-specific information that was not available to a specific vendor.



(in thousands)	Hawaiian Electric			Hawaii Electric Light		Maui Electric		Other subsidiaries	Consolidating adjustments		Hawaiian Electric Consolidated
Net income for common stock	$	59,715		8,272		9,044		—	(17,316	)	$	59,715
Other comprehensive income (loss), net of taxes:
Retirement benefit plans:
Less: amortization of prior service credit and net losses recognized during the period in net periodic benefit cost, net of tax benefits	10,190			1,364		1,252		—	(2,616	)	10,190
Less: reclassification adjustment for impact of D&Os of the PUC included in regulatory assets, net of taxes	(10,183		)	(1,367	)	(1,255	)	—	2,622		(10,183		)
Other comprehensive income (loss), net of taxes	7			(3	)	(3	)	—	6		7
Comprehensive income attributable to common shareholder	$	59,722		8,269		9,041		—	(17,310	)	$	59,722

Loans receivable. The estimated fair value of loans receivable is determined based on characteristics such as loan category, repricing features and remaining maturity, and includes prepayment estimates.

For residential real estate loans, fair values were estimated by discounting estimated cash flows using discount rates based on current industry pricing for loans with similar contractual characteristics and remaining maturity.

For other types of loans, fair values were estimated by discounting contractual cash flows using discount rates that reflect current industry pricing for loans with similar characteristics and remaining maturity. Where industry pricing is not available, discount rates are based on ASB’s current pricing for loans with similar characteristics and remaining maturity.

The fair value of all loans was adjusted to reflect current assessments of loan collectability. Also see “Fair value measurements on a nonrecurring basis” below.

Deposit liabilities. The fair value of savings, negotiable orders of withdrawal, demand and money market deposits was the amount payable on demand at the reporting date. The fair value of fixed-maturity certificates of deposit was estimated by discounting the future cash flows using the rates currently offered for deposits of similar remaining maturities.

Other bank borrowings. Fair value was estimated by discounting the future cash flows using the current rates available for borrowings with similar credit terms and remaining maturities.

~~Long-term~~Hawaiian ~~debt~~Electric Company, Inc. ~~Fair~~ ~~value was obtained from third-party financial services providers based on the current rates offered for debt of the same or similar remaining maturities~~ and ~~from discounting the future cash flows using the current rates offered for debt of the same or similar remaining maturities.~~Subsidiaries

~~Derivative~~Consolidating ~~financial~~Statement ~~instruments. See~~of ~~“Fair~~Income ~~value measurements on a recurring basis” below.~~(unaudited)

~~Off-balance~~Six ~~sheet~~months ~~financial~~ended ~~instruments. The~~June fair value of loans serviced for others was calculated by discounting expected net income streams using discount rates that reflect industry pricing for similar assets. Expected net income streams were estimated based on industry assumptions regarding prepayment speeds and income and expenses associated with servicing residential mortgage loans for others. The fair value of commitments to originate loans was estimated based on the change in current primary market prices of new commitments. Since lines of credit can expire without being drawn and customers are under no obligation to utilize the lines30, no2014 fair value was assigned to unused lines of credit. The fair value of letters of credit was estimated based on the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements.

The estimated fair values of certain of the Company’s financial instruments were as follows:



(in thousands)	Hawaiian Electric		Hawaii Electric Light	Maui Electric		Other subsidiaries	Consolidating adjustments		Hawaiian Electric Consolidated
Revenues	$	1,043,446	208,475	206,609		—	(39	)	$	1,458,491
Expenses
Fuel oil	399,096		62,679	94,782		—	—		556,557
Purchased power	264,774		57,661	30,804		—	—		353,239
Other operation and maintenance	127,507		28,864	30,799		—	—		187,170
Depreciation	54,601		17,951	10,644		—	—		83,196
Taxes, other than income taxes	98,133		19,520	19,942		—	—		137,595
Total expenses	944,111		186,675	186,971		—	—		1,317,757
Operating income	99,335		21,800	19,638		—	(39	)	140,734
Allowance for equity funds used during construction	2,889		186	(79	)	—	—		2,996
Equity in earnings of subsidiaries	18,776		—

Filing Compare · HAWAIIAN ELECTRIC CO INC