Item 1.01. Entry into a Material Definitive Agreement.
On December 31, 2019, Hawaii Electric Light Company, Inc., a wholly-owned
subsidiary of Hawaiian Electric now doing business as "Hawaiian Electric"
(Hawaii Electric Light), and Puna Geothermal Venture (PGV) entered into an
amended and restated power purchase agreement (Amended and Restated PPA),
subject to approval by the Public Utilities Commission of the State of Hawaii
(PUC). The Amended and Restated PPA amends and restates: (1) the Power Purchase
Contract between Hawaii Electric Light and PGV, as assignee of Thermal Power
Company, dated March 24, 1986, as amended, and (2) the Power Purchase Agreement
between Hawaii Electric Light and PGV dated February 7, 2011 (collectively, the
Existing PPA). Among other things, the Amended and Restated PPA (i) extends the
term of the Existing PPA by 25 years to 2052, (ii) expands the firm capacity
capable of being delivered by 8 megawatts (MW) to 46 MW, (iii) delinks the
pricing for energy delivered from the facility from fossil fuel prices and fixes
the energy pricing for the term of the contract at $0.07/kilowatt-hour (kWh) for
the first 227,000 megawatt-hours (MWh) delivered in a contract year, and
$0.04/kWh for energy delivered above that threshold (subject to adjustment based
on PGV's ability to deliver the firm capacity), and (iv) fixes, subject to
adjustment, the capacity charge at no more than $19.5 million per year for the
facility's ability to deliver the contract firm capacity.
The Existing PPA will remain in effect until it is superseded by the Amended and
Restated PPA (except for lower-tiered pricing for certain energy dispatched in
the 30-38 MW range). Certain provisions of the Amended and Restated PPA,
however, relating to the development and construction of PGV's upgraded
facility, become effective upon its execution, subject to PUC approval. The
pricing provisions and overall administration of the upgraded facility under the
Amended and Restated PPA will not become effective until the 8 MW upgrade begins
commercial operation, or the contractual deadline for completion of the 8 MW
upgrade, whichever occurs earlier. At that time, the Amended and Restated PPA
will supersede the Existing PPA. Before such occurrence, the Amended and
Restated PPA may be declared null and void by either party if (i) PUC approval
is not received, under certain conditions, within 12 months of submittal to the
PUC, or within 18 months in the event of an appeal, or (ii) if the request for
PUC approval is denied.
The foregoing description of the Amended and Restated PPA is a summary and
therefore does not include all of the terms and conditions of the agreement;
thus it is qualified in its entirety by reference to the full text of the
Amended and Restated PPA, which will be filed as an exhibit to the registrant's
Annual Report on Form 10-K for fiscal year 2019.
Item 7.01. Regulation FD Disclosure.
On January 2, 2020, Hawaiian Electric issued a press release announcing the
Amended and Restated PPA. A copy of the press release is being filed as Exhibit
99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
HEI and Hawaiian Electric intend to continue to use HEI's website, www.hei.com,
as a means of disclosing additional information. Such disclosures will be
included on HEI's website in the Investor Relations section. Accordingly,
investors should routinely monitor such portions of HEI's website, in addition
to following HEI's, Hawaiian Electric's and American Savings Bank, F.S.B.'s
(ASB's) press releases, HEI's and Hawaiian Electric's SEC filings and HEI's
public conference calls and webcasts. The information on HEI's website is not
incorporated by reference in this document or in HEI's and Hawaiian Electric's
Securities and Exchange Commission (SEC) filings unless, and except to the
extent, specifically incorporated by reference. Investors may also wish to refer
to the PUC website at dms.puc.hawaii.gov/dms (Docket No. 2019-0333 for the PGV
Amended and Restated PPA proceeding) in order to review
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documents filed with and issued by the PUC. No information on the PUC website is
incorporated by reference in this document or in HEI's and Hawaiian Electric's
other SEC filings.
FORWARD-LOOKING STATEMENTS
This report may 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 "will," "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, 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.
Forward-looking statements in this report should be read in conjunction with the
"Cautionary Note Regarding Forward-Looking Statements" and "Risk Factors"
discussions (which are incorporated by reference herein) set forth in HEI's and
Hawaiian Electric's Annual Report on Form 10-K for the year ended December 31,
2018 and HEI's and Hawaiian Electric's Quarterly Report on Form 10-Q for the
quarter ended September 30, 2019 and HEI's future periodic reports that discuss
important factors that could cause HEI's results to differ materially from those
anticipated in such statements. These 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.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit 99.1 News release, dated January 2, 2020, "Hawaiian Electric, Puna
Geothermal Venture reach new agreement to reduce cost, expand
output"
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
The information furnished in connection with Item 7.01 of this current report on
Form 8-K shall not be deemed "filed" for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended (the Exchange Act), or incorporated
by reference in any filing under the Securities Act of 1933, as amended, or the
Exchange Act, except as shall be expressly set forth by specific reference in
such a filing.
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