Item 1.01 Entry into a Material Definitive Agreement. OnOctober 29, 2021 ,Hawaiian Electric andKalaeloa Partners L.P. (Kalaeloa ), a limited partnership, entered into an Amended and Restated Power Purchase Agreement for Firm Dispatchable Capacity and Energy (Amended and Restated PPA). The Amended and Restated PPA amends and restates in its entirety the agreement betweenHawaiian Electric andKalaeloa datedOctober 1988 (Original Agreement), as amended by amendments number one through six, the most recent of which was entered into onOctober 12, 2004 (the Original Agreement as so amended, Amended Agreement). TheKalaeloa facility, which was completed in 1991, is a combined-cycle operation, consisting of two oil-fired combustion turbines (CTs) burning low sulfur fuel oil and a steam turbine that utilizes waste heat from the CTs (Facility). The Facility is designed to sell sufficient steam to be a qualifying facility under the Public Utility Regulatory Policies Act of 1978. The Facility provides essential reliability services, asHawaiian Electric increases its reliance on intermittent renewable sources of energy. The Amended and Restated PPA also providesHawaiian Electric with a mechanism to require the Facility to convert to the use of an alternative fuel, subject to certain conditions, shouldHawaiian Electric deem it necessary or desirable, including for the purpose of meeting the requirements of the renewable portfolio standards law, greenhouse gas reduction requirements, orState of Hawaii energy policy objectives. The Amended and Restated PPA provides for a term of 10 years from the date of approval of the Amended and Restated PPA from theHawaii Public Utilities Commission (PUC), with the continued obligation during the term forHawaiian Electric to purchase 208 megawatts (MW) of firm capacity, with the fixed capacity charge being reduced to$100 /kilowatts (kW) per year for the full 208 MW, as compared to$164.35 /kW per year for the first 180 MW and$112 /kW per year for the additional 28 MW, under the Amended Agreement. Additionally, the price and structure for operations and maintenance charges under the Amended Agreement were replaced in the Amended and Restated PPA with a variable operations and maintenance charge of$0.005 /kilowatt-hours (kWh) in 2022 dollars, escalating with the gross domestic product implicit price deflator (GDPIPD), a fixed operations and maintenance charge of$90 /kW per year for 208 MW, and an overhaul component charge of$425 /hour (in 2022 dollars) that each combustion turbine generation unit is operated plus the number of times that each combustion turbine starts multiplied by 20 during the calendar month, escalating with GDPIPD. In exchange, requirements for a minimum energy purchase were removed. The Amended and Restated PPA also (i) includes updates and additions to the performance standards in the Amended Agreement which provide greater flexibility toHawaiian Electric's system operators in the dispatch of the Facility, (ii) requiresHawaiian Electric to reimburseKalaeloa for any carbon (or similar) tax imposed in connection with its operation of the Facility, subject to the qualification that any order from the PUC approving the Amended and Restated PPA will not be acceptable toHawaiian Electric if it does not allowHawaiian Electric to recover such amounts throughHawaiian Electric's Purchase Power Adjustment Clause, (iii) requiresKalaeloa to substitute the parent guaranty provided as operating period security with a letter of credit, (iv) requiresKalaeloa to engage in certain community engagement and outreach activities, and (v) updates the cybersecurity provisions. Subject to limited exceptions, the effectiveness of the Amended and Restated PPA is subject to the satisfaction of certain conditions, including issuance by the PUC of an order approving the Amended and Restated PPA that is acceptable toHawaiian Electric . When all such conditions have been satisfied, the Amended and Restated PPA will become effective and supersede the Amended Agreement. Before that time, the Amended and Restated PPA may be declared null and void by (A) either party if (i) PUC approval is not received, under certain conditions, within 12 months of submittal of the application for approval to the PUC, or within 18 months in the event of an appeal, or (ii) if the request for PUC approval 1 -------------------------------------------------------------------------------- is denied; or (B)Hawaiian Electric ifKalaeloa is in breach of any of its representations, warranties or covenants, which in the Company's reasonable judgment, either has a material adverse effect onKalaeloa's ability to perform under the Amended and Restated PPA, or materially increasesHawaiian Electric's operational, financial or reputational risk associated with the Amended and Restated PPA. Until the Amended and Restated PPA becomes effective and supersedes the Amended Agreement, the Amended Agreement will remain in effect. 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 2021.HEI andHawaiian 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 andAmerican 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 inHEI'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. 2011-0351 for the Kalaeloa Amended and Restated PPA proceeding) in order to review documents filed with and issued by the PUC. No information on the PUC website is incorporated by reference in this document or inHEI's andHawaiian Electric's otherSEC filings. Forward-looking statements
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discussions (which are incorporated by reference herein) set forth in
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