Item 1.01 Entry into a Material Definitive Agreement.
On August 14, 2024, Hawaiian Electric Company, Inc., and its subsidiaries Hawaii Electric Light Company, Inc., and Maui Electric Company, Limited, (collectively, the Companies) and PAR Hawaii Refining, LLC (PAR), entered into a Second Amendment to Supply Agreement for Petroleum Fuels (Second Amendment), which amends that Supply Agreement for Petroleum Fuels dated January 19, 2022, as amended by the First Amendment to Supply Agreement for Petroleum Fuels dated February 1, 2022 (Supply Agreement). The Supply Agreement is an agreement for the Companies’ Low Sulfur Fuel Oil Supply (LSFO), High Sulfur Fuel Oil (HSFO), No. 2 Diesel (Diesel), and Ultra-Low Sulfur Diesel (ULSD) requirements. The Second Amendment extends the term of the Supply Agreement through January 31, 2029, and provides for automatic one-year extensions thereafter beginning on February 1, 2029, unless a party gives written termination notice at least 120 days before the beginning of an extension.
In addition to extending the term, the Second Amendment amends LSFO pricing. While all LSFO in the current contract is priced on the same index, LSFO pricing for volumes up to 13,500 barrels per day will be based on an average of two indices that the Companies expect will remove some pricing volatility risk on the majority of LSFO volume that the Companies purchase. Also, the Second Amendment amends the Supply Agreement’s LSFO tiered discount and premium structure to provide only a discount structure for all tiers. The Companies will file an application with the Public Utilities Commission of the State of Hawaii (PUC), requesting approval of the Second Amendment and to recover the costs associated with the Second Amendment through the energy cost recovery clause to the extent the costs are not recovered in base rates. The Second Amendment must be approved by the PUC to become effective.
The foregoing description of the Second Amendment is limited and qualified in its entirety by reference to the full text of the Second Amendment, which will be filed as an exhibit to the registrant's Quarterly Report on Form 10-Q for the quarter ending September 30, 2024.
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) press releases, HEI’s and Hawaiian Electric’s Securities and Exchange Commission (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 SEC filings unless, and except to the extent, specifically incorporated by reference. Investors may also wish to refer to the PUC website at hpuc.my.site.com/cdms/s to review 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.