Curious about HE

[twirler]

Hawaiian Eletric industries is something that's been on my watch list since long before I swore I would never purchase single stocks. The time of my boglehead view of the world has come and gone. I holds a few other things, (mostly bluechips I got on sale during chrona.) I feel like it's the time for me to make a play at this. Any and all opinions would be greatly appreciated. I am essentially always looking for a cheap deal on utilities. I have no problem with a long hold time period. I like to buy anything I think that's cheap and could represent a real value even over the long haul. my holding time is forever.

Thanks for any and all input.

Sincerely,

~T

 

[nvestysly]

I've not given any thought to HE but have made purchases of other utilities when the news for the individual companies was negative so I can appreciate your line of thought. For comparison, perhaps take a look at PG&E (PCG) to see how that stock has played out after fires in California several years ago. I'm not saying PCG and HE are the same by any means so the comparison may be fruitless.

Here's a comment from Value Line regarding HE. Notice this was written prior to the fires in Hawaii. Value Line apparently has concern on several fronts, including a financial institution owned by HE. A utility company in the banking business seems odd to me but I haven't taken time to understand the ins/out of the venture.

An Untimely rating by Value Line is not a bad thing. It generally means the stock is beaten up and will take a while to recover. You indicate you have long time horizon so maybe HE is something to consider if it meets other objectives.

 

[twirler]

I've not given any thought to HE but have made purchases of other utilities when the news for the individual companies was negative so I can appreciate your line of thought. For comparison, perhaps take a look at PG&E (PCG) to see how that stock has played out after fires in California several years ago. I'm not saying PCG and HE are the same by any means so the comparison may be fruitless.

Here's a comment from Value Line regarding HE. Notice this was written prior to the fires in Hawaii. Value Line apparently has concern on several fronts, including a financial institution owned by HE. A utility company in the banking business seems odd to me but I haven't taken time to understand the ins/out of the venture.

An Untimely rating by Value Line is not a bad thing. It generally means the stock is beaten up and will take a while to recover. You indicate you have long time horizon so maybe HE is something to consider if it meets other objectives.

Thank you for your timely reply. I am estimating 18 months turn around time before we see this produce fruit for plucking. Considering the monopolistic nature of it's situation I am finding it... tempting. We shall see. I think I am diving in, full disclosure.

 

[Dash man]

Thank you for your timely reply. I am estimating 18 months turn around time before we see this produce fruit for plucking. Considering the monopolistic nature of it's situation I am finding it... tempting. We shall see. I think I am diving in, full disclosure.

Take a look at NEE. It’s been beaten up this year, but I don’t see any reason it shouldn’t recover over time. I recently purchased 1,000 shares.

 

[Sunset]

There is a danger of HECO declaring bankruptcy, which could wipe out shareholders.

 

[Koolau]

I have no special insight into HE though I'm a customer. I know that our electricity in the Islands is the most expensive in the USA.



We personally keep reducing our electricity usage but our bill remains about the same as rates climb.



We've changed out all the light bulbs to LEDs. Our fridge is a year old and is quite efficient. We now rarely use our oven but rather use the microwave or else the toaster oven. So, we really do try to conserve electricity. But, our bills are still about the same as before.



I'm afraid we've run out of things to do - except one thing: When we travel to the mainland, we turn off all the electronics associated with the TV and internet. Doing that reduces our electrical usage to about 1KWh/day. I may have to begin doing that each night before bed time - turning stuff back on when we are about to use it the next day. What a pain.


SO, sorry that this is more of a rant than a discussion of the stock. Apparently, HECO has no problems getting its rate increase approved by the PUC, so that is probably good for the stock.


The elephant in the room is the fires on Maui. It's almost certain that the electrical system caused the fires. To what extent that puts the electric company on the hook for damages, I do not know - but I would be wary. Very much a YMMV.

 

[Mulligan]

I have no special insight into HE though I'm a customer. I know that our electricity in the Islands is the most expensive in the USA.



We personally keep reducing our electricity usage but our bill remains about the same as rates climb.



We've changed out all the light bulbs to LEDs. Our fridge is a year old and is quite efficient. We now rarely use our oven but rather use the microwave or else the toaster oven. So, we really do try to conserve electricity. But, our bills are still about the same as before.



I'm afraid we've run out of things to do - except one thing: When we travel to the mainland, we turn off all the electronics associated with the TV and internet. Doing that reduces our electrical usage to about 1KWh/day. I may have to begin doing that each night before bed time - turning stuff back on when we are about to use it the next day. What a pain.


SO, sorry that this is more of a rant than a discussion of the stock. Apparently, HECO has no problems getting its rate increase approved by the PUC, so that is probably good for the stock.


The elephant in the room is the fires on Maui. It's almost certain that the electrical system caused the fires. To what extent that puts the electric company on the hook for damages, I do not know - but I would be wary. Very much a YMMV.

Kind of surprised you appear to nudge out WAPA (US Virgin Islands) in residential KW cost.

https://www.viwapa.vi/customer-service/rates/electric-rate

https://www.hawaiianelectric.com/bi...-and-regulations/average-price-of-electricity

 

[twirler]

In all honesty everything you told me about them as a customer reenforces my idea of being a shareholder. Sadly it seems the worst(moral) companies turn the best profits. My simple opinion is that should you not be able to afford electricity than you can't afford to to live at that location. In the same way some people get to go boating around the world eating the best food. (something I can't do.) Others can't afford to eat steak every night. I frequently hear this complaint from renters demanding some sort of rent control in a major city. If rent is too high you just are too broke to live there. Adding price controls to things is just outright bad economics.

As far as the company itself, it's priced in the teens for a monopoly. Need I say more than that? Also it's federally regulated. from a value stand point unless we move away from eletricity as a utility completely I don't see this being a bad buy.

 

[Sunset]

... I know that our electricity in the Islands is the most expensive in the USA.

We personally keep reducing our electricity usage but our bill remains about the same as rates climb.

.... So, we really do try to conserve electricity. But, our bills are still about the same as before.

I'm afraid we've run out of things to do - except one thing: When we travel to the mainland, we turn off all the electronics associated with the TV and internet. Doing that reduces our electrical usage to about 1KWh/day. I may have to begin doing that each night before bed time - turning stuff back on when we are about to use it the next day. What a pain.

..

My FIL used to do this, and to make it easier, he put power bars where there were lots of things plugged in. Then it's just a simple one switch to flick on/off for each set of things.

 

[Mulligan]

In all honesty everything you told me about them as a customer reenforces my idea of being a shareholder. Sadly it seems the worst(moral) companies turn the best profits. My simple opinion is that should you not be able to afford electricity than you can't afford to to live at that location. In the same way some people get to go boating around the world eating the best food. (something I can't do.) Others can't afford to eat steak every night. I frequently hear this complaint from renters demanding some sort of rent control in a major city. If rent is too high you just are too broke to live there. Adding price controls to things is just outright bad economics.

As far as the company itself, it's priced in the teens for a monopoly. Need I say more than that? Also it's federally regulated. from a value stand point unless we move away from eletricity as a utility completely I don't see this being a bad buy.

You really havent mentioned the potential $5-$6 billion liabilities that many are trying put a bullseye on HE…including the local govt. The fire devastation far outweighs the equity value of the hold co which is presently under $2B, and that doesn’t include any other current hold co and subsidiary debt. Probably no more than $1b in insurance liability. The likely successful outcome of the investment will be decided inside the courthouse and not their economic performance.

 

[Koolau]

Kind of surprised you appear to nudge out WAPA (US Virgin Islands) in residential KW cost.

https://www.viwapa.vi/customer-service/rates/electric-rate

https://www.hawaiianelectric.com/bi...-and-regulations/average-price-of-electricity

Thanks for the site - very interesting.


Keep in mind that one reason our rates are so high is because of all the fees that are added. Right now, since I'm not home, I'm using 1Kwh/day and it costs just over 1 dollar!

 

[Koolau]

In all honesty everything you told me about them as a customer reenforces my idea of being a shareholder. Sadly it seems the worst(moral) companies turn the best profits. My simple opinion is that should you not be able to afford electricity than you can't afford to to live at that location. In the same way some people get to go boating around the world eating the best food. (something I can't do.) Others can't afford to eat steak every night. I frequently hear this complaint from renters demanding some sort of rent control in a major city. If rent is too high you just are too broke to live there. Adding price controls to things is just outright bad economics.

As far as the company itself, it's priced in the teens for a monopoly. Need I say more than that? Also it's federally regulated. from a value stand point unless we move away from eletricity as a utility completely I don't see this being a bad buy.

I'm not sure how this will play out but there may well be liability (to some extent) for the Maui fire. Whether you can actually "hurt" a utility with a law suit, I don't know. If they have a judgement against them in the future, I just assume my rates will go up - again!

 

[twirler]

Yep, and seeing as how they "are" the government because its federally regulated, and how the Biden administration just promised 100m in infrastructure spending I'll bet on the house.

 

[Koolau]

My FIL used to do this, and to make it easier, he put power bars where there were lots of things plugged in. Then it's just a simple one switch to flick on/off for each set of things.

I think I'm down to two bars to "kill" everything. So, I could do it at night without too much hassle. Problem then is: I gotta wait 5 or 10 minutes for everything to come up. I'm lazy and don't like to mess with it but I especially hate to wait for stuff to go live.



Having whined about all that I'm gonna try it and just see. I'm betting I can save a KWh/day - though that's not really much money though it would be 20% of my usage!!

 

[Mulligan]

I'm not sure how this will play out but there may well be liability (to some extent) for the Maui fire. Whether you can actually "hurt" a utility with a law suit, I don't know. If they have a judgement against them in the future, I just assume my rates will go up - again!

I doubt it would cause your rates to go down. A lot of variables could occur, assuming they are even found liable at all. An unbelievable common stock dilution could occur and bond holders and preferreds made whole (ala PCG, as its common stock was $70 before the fires now its still sub $20 many years later). Equity could get wiped out and bond holders become new equity owners with new debt added on. Or all wiped out and fresh capitalization occurs on extreme end.
The biggest risk to higher rates would be the “infrastructure rebuild/hardening” as that could be past along to existing customers if regulatory agency gives the go ahead. Still way to early in process to speculate on any outcome though.

 

[Koolau]

I doubt it would cause your rates to go down. A lot of variables could occur, assuming they are even found liable at all. An unbelievable common stock dilution could occur and bond holders and preferreds made whole (ala PCG, as its common stock was $70 before the fires now its still sub $20 many years later). Equity could get wiped out and bond holders become new equity owners with new debt added on. Or all wiped out and fresh capitalization occurs on extreme end.
The biggest risk to higher rates would be the “infrastructure rebuild/hardening” as that could be past along to existing customers if regulatory agency gives the go ahead. Still way to early in process to speculate on any outcome though.

Yeah, no idea where this is heading, but I don't expect anything good for customers. Hopefully, at least they will figure out how to prevent fires in the future. I actually thought this was all figured out years ago - but I guess not. Now, if we can figure out water usage issues...

 

[GhostofTomJoad]

HE is a public, regulated utility with a twist: the only utility company I ever heard of which OWNS a BANK! (American Savings Bank, here in the islands.) I dunno how either one can be fairly analyzed and a reasonably accurate enterprise vale assigned to either one of them. And yes, there will be huge legal libilities from the Maui fires. This one's not for me!

 

[Koolau]

HE is a public, regulated utility with a twist: the only utility company I ever heard of which OWNS a BANK! (American Savings Bank, here in the islands.) I dunno how either one can be fairly analyzed and a reasonably accurate enterprise vale assigned to either one of them. And yes, there will be huge legal libilities from the Maui fires. This one's not for me!

Heh, heh, so now we know where "Nope" is. (Is that windward or leeward?)

But seriously, I didn't know that and ASB is my bank. I guess if I ever forget to pay my electric bill, ASB can just take the funds out of my checking account.

Stuff like this is rampant in the Islands. Every local person has relatives and they all look out for each other. That there would be such an "alliance" does not surprise me at all - though I guess it does disappoint me a bit that PUC would allow it. Of course, YMMV.

Now, don't get me started on why we have "The Rail."

 

[Mulligan]

Heh, heh, so now we know where "Nope" is. (Is that windward or leeward?)

But seriously, I didn't know that and ASB is my bank. I guess if I ever forget to pay my electric bill, ASB can just take the funds out of my checking account.

Stuff like this is rampant in the Islands. Every local person has relatives and they all look out for each other. That there would be such an "alliance" does not surprise me at all - though I guess it does disappoint me a bit that PUC would allow it. Of course, YMMV.

Now, don't get me started on why we have "The Rail."

Hawaii Electric Industries is the holding company that owns the common stock of Hawaii Electric Company which is the actual operating entity. Hawaii Electric Company actually owns Maui Electric. Holding companies can own various unrelated companies. Though typically something like an unregulated entity in their field like a power producing entity. But yes, a bank is highly unusual.

 

[GhostofTomJoad]

Heh, heh, so now we know where "Nope" is. (Is that windward or leeward?)

But seriously, I didn't know that and ASB is my bank. I guess if I ever forget to pay my electric bill, ASB can just take the funds out of my checking account.

Stuff like this is rampant in the Islands. Every local person has relatives and they all look out for each other. That there would be such an "alliance" does not surprise me at all - though I guess it does disappoint me a bit that PUC would allow it. Of course, YMMV.

Now, don't get me started on why we have "The Rail."

That commuter Rail is the dumbest junk, ever. I'm in town, in Makiki. I could throw a stone to Kapi'olani hospital for women and kids. I'm just on the other side of the freeway. wife works in Kailua. When we first got here, we lived in Kaneohe.

BTW, we use Hickam and Navy FCU. Much prefer credit unions.

 

[Sunset]

I think I'm down to two bars to "kill" everything. So, I could do it at night without too much hassle. Problem then is: I gotta wait 5 or 10 minutes for everything to come up. I'm lazy and don't like to mess with it but I especially hate to wait for stuff to go live.

....

We have one of those fancy power bars, where I turn off the TV at night and it commands the slave sockets to cut the power to other things, like our speakers, DVD player, etc.
When I turn on the TV, I have no delay noticeable in the other things coming alive.
I don't kill the power to the TV as then it loses the date.

 

[Koolau]

We have one of those fancy power bars, where I turn off the TV at night and it commands the slave sockets to cut the power to other things, like our speakers, DVD player, etc.
When I turn on the TV, I have no delay noticeable in the other things coming alive.
I don't kill the power to the TV as then it loses the date.

Heh, heh, my TV is too stupid to have a date (or maybe I'm too stupid to know where the date is on the TV.) I do know that when I turn everything back on, the DVR/Receiver takes about 4 or 5 minutes to come up. It's all synchronized and ready to go at that point, so it's more laziness on my part I guess. BUT, now that I see the significant difference (well, we're also gone, so there are no lights either) I think I'll try turning everything off at night for a month - just to see if makes a difference worth doing.

 

[SecondAttempt]

I live in Hawaii and have watched Hawaiian Electric stock for years. I also have several family and friend connections to current and former employees. That's not to say I have any inside information. But on the islands, the coconut wireless is the best source of information so I'm not even sure what inside means here.

I'm not going to give stock advice on this but I will offer comments. First HEI is a monopoly and will remain so. They offer horrible customer service where I am but that hardly matters because there are few customers in my area.

Their focus seems to be on going completely renewable. Regardless of your politics, that makes sense in Hawaii since delivery of oil is incredibly expensive. But it also means they are facing huge capital costs in the coming years. Grid restoration costs can be huge and unpredictable as evidenced both with the Maui fires and the Puna eruption.

I think they will likely face bankrupcy because of the Maui Fires.

 

[GhostofTomJoad]

I live in Hawaii and have watched Hawaiian Electric stock for years.

I think they will likely face bankrupcy because of the Maui Fires.

Holy cow. Like PG&E. ......

 

[Mulligan]

Holy cow. Like PG&E. ......

There are different type of bankruptcies though. PGE “bankruptcy” consisted of all bonds and preferreds made entirely whole. While the equity just had severe dilution and was not wiped out. Typically bankruptcy frees companies of debt. PCG actually increased debt coming out of bankruptcy.