UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C.
20549
FORM 10-K
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||||
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For the fiscal year ended December 31, 2002 | ||||||||||
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OR | ||||||||||
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||||
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Registrant; State of Incorporation; |
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I.R.S. Employer | |||||||
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| 1-8503 |
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HAWAIIAN ELECTRIC INDUSTRIES, INC. (A Hawaii Corporation) |
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99-0208097 | |||||||
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| 1-4955 |
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HAWAIIAN ELECTRIC COMPANY, INC. (A Hawaii Corporation) |
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99-0040500 | |||||||
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| Securities registered pursuant to Section 12(b) of the Act: | |||||||||||
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| Registrant |
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Title of each class |
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Name of each exchange | |||||||
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| Hawaiian Electric Industries, Inc. |
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Common Stock, Without Par Value |
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New York Stock Exchange | |||||||
| Hawaiian Electric Industries, Inc. |
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Guarantee with respect to 8.36% Trust Originated Preferred Securities SM (TOPrS SM) |
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New York Stock Exchange | |||||||
| Hawaiian Electric Industries, Inc. |
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Preferred Stock Purchase Rights |
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New York Stock Exchange | |||||||
| Hawaiian Electric Company, Inc. |
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Guarantee with respect to 8.05% Cumulative Quarterly Income Preferred Securities Series 1997 (QUIPSSM) |
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New York Stock Exchange | |||||||
| Hawaiian Electric Company, Inc. |
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Guarantee with respect to 7.30% Cumulative Quarterly Income Preferred Securities Series 1998 (QUIPSSM) |
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New York Stock Exchange | |||||||
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| Securities registered pursuant to Section 12(g) of the Act: | |||||||||||
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| Registrant |
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Title of each class | |||||||||
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| Hawaiian Electric Industries, Inc. |
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None | |||||||||
| Hawaiian Electric Company, Inc. |
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Cumulative Preferred Stock | |||||||||
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.
| Yes x |
No o |
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o
Indicate by check mark whether Registrant Hawaiian Electric Industries, Inc. is an accelerated filer (as defined in Rule 12b-2 of the Act).
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No o |
Indicate by check mark whether Registrant Hawaiian Electric Company, Inc. is an accelerated filer (as defined in Rule 12b-2 of the Act).
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No x |
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Aggregate market value of |
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Number of shares of |
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| Hawaiian Electric Industries, Inc. |
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$ |
1,546,487,536.65 |
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37,024,258 |
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(Without par value) |
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| Hawaiian Electric Company, Inc. |
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Not applicable |
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12,805,843 |
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($6 2/3 par value) |
DOCUMENTS INCORPORATED BY REFERENCE
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Part of Form 10-K into which the document is incorporated | |
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| Annual Reports to Stockholder(s) of the following registrants for the fiscal year ended December 31, 2002: |
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Hawaiian Electric Industries, Inc. |
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Parts I, II, III and IV |
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Hawaiian Electric Company, Inc. (except for pages 3, 58 and 60) |
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Parts I, II, III and IV |
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| Portions of Proxy Statement of Hawaiian Electric Industries, Inc., dated March 10, 2003, for the Annual Meeting of Stockholders |
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Part III | |
This combined Form 10-K represents separate filings by Hawaiian Electric
Industries, Inc. and Hawaiian Electric Company, Inc. Information contained herein relating to any individual registrant is filed by each registrant on its own behalf. Neither registrant makes any representations as to the information relating to the
other registrant.
TABLE OF CONTENTS
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| Item 1. |
1 | |
| Item 2. |
49 | |
| Item 3. |
50 | |
| Item 4. |
51 | |
| Executive Officers of the Registrant (Hawaiian Electric Industries, Inc.) |
51 | |
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| Item 5. |
Market for Registrants’ Common Equity and Related Stockholder Matters |
52 |
| Item 6. |
54 | |
| Item 7. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
54 |
| Item 7A. |
54 | |
| Item 8. |
54 | |
| Item 9. |
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |
54 |
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| Item 10. |
55 | |
| Item 11. |
58 | |
| Item 12. |
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
61 |
| Item 13. |
62 | |
| Item 14. |
63 | |
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| Item 15. |
Exhibits, Financial Statement Schedules and Reports on Form 8-K |
64 |
| Independent Auditors’ Report - Hawaiian Electric Industries, Inc. |
66 | |
| Independent Auditors’ Report - Hawaiian Electric Company, Inc. |
67 | |
| 72 | ||
| 97 | ||
| 100 | ||
i
Defined below are certain terms used in this report:
| Terms |
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Definitions |
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| 1935 Act |
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Public Utility Holding Company Act of 1935 |
| AES Hawaii |
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AES Hawaii, Inc., formerly known as AES Barbers Point, Inc. |
| ASB |
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American Savings Bank, F.S.B., a wholly-owned subsidiary of HEI Diversified, Inc. and parent company of American Savings Investment Services Corp. (and its subsidiary since March 15, 2001, Bishop Insurance Agency of Hawaii, Inc.), ASB Service Corporation, AdCommunications, Inc., American Savings Mortgage Co., Inc. and ASB Realty Corporation |
| BIF |
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Bank Insurance Fund |
| BoA |
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Bank of America, FSB |
| BLNR |
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Board of Land and Natural Resources of the State of Hawaii |
| Btu |
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British thermal unit |
| CDUP |
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Conservation District Use Permit |
| CERCLA |
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Comprehensive Environmental Response, Compensation and Liability Act |
| Chevron |
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Chevron Products Company, a fuel oil supplier |
| Company |
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Hawaiian Electric Industries, Inc. and its direct and indirect subsidiaries, including, without limitation, Hawaiian Electric Company, Inc., Maui Electric Company, Limited, Hawaii Electric Light Company, Inc., HECO Capital Trust I, HECO Capital Trust II, Renewable Hawaii, Inc., HEI Diversified, Inc., American Savings Bank, F.S.B. and its subsidiaries, Pacific Energy Conservation Services, Inc., HEI District Cooling, Inc., ProVision Technologies, Inc., HEI Properties, Inc., HEI Leasing, Inc., Hycap Management, Inc., Hawaiian Electric Industries Capital Trust I, Hawaiian Electric Industries Capital Trust II, Hawaiian Electric Industries Capital Trust III, HEI Preferred Funding, LP, The Old Oahu Tug Service, Inc. (formerly Hawaiian Tug & Barge Corp.), HEI Power Corp. and its subsidiaries and Malama Pacific Corp. |
| Consumer Advocate |
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Division of Consumer Advocacy, Department of Commerce and Consumer Affairs of the State of Hawaii |
| CT |
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Combustion turbine |
| DLNR |
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Department of Land and Natural Resources of the State of Hawaii |
| D&O |
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Decision and order |
| DOD |
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Department of Defense – federal |
| DOH |
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Department of Health of the State of Hawaii |
| DSM |
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Demand-side management |
| DTCC |
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Dual-train combined-cycle |
| EAPRC |
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East Asia Power Resources Corporation |
| ECA |
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Energy cost adjustment |
| Enserch |
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Enserch Development Corporation |
| EPA |
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Environmental Protection Agency – federal |
| ERL |
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Environmental Response Law of the State of Hawaii |
| FDIC |
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Federal Deposit Insurance Corporation |
ii
GLOSSARY OF TERMS (continued)
| Terms |
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Definitions |
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| FDICIA |
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Federal Deposit Insurance Corporation Improvement Act of 1991 |
| federal |
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U.S. Government |
| FHLB |
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Federal Home Loan Bank |
| FICO |
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Financing Corporation |
| FIRREA |
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Financial Institutions Reform, Recovery, and Enforcement Act of 1989 |
| Hamakua Partners |
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Hamakua Energy Partners, L.P., formerly known as Encogen Hawaii, L.P. |
| HRD |
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Hawi Renewable Development, Inc. |
| HCPC |
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Hilo Coast Power Company, formerly Hilo Coast Processing Company |
| HC&S |
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Hawaiian Commercial & Sugar Company, a division of A&B-Hawaii, Inc. |
| HECO |
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Hawaiian Electric Company, Inc., an electric utility subsidiary of Hawaiian Electric Industries, Inc. and parent company of Maui Electric Company, Limited, Hawaii Electric Light Company, Inc., HECO Capital Trust I, HECO Capital Trust II and Renewable Hawaii, Inc. |
| HECO’s |
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Portions of Hawaiian Electric Company, Inc.’s 2002 Annual Report to Stockholder filed as HECO Exhibit 13, which portions are incorporated into this Form 10-K by reference |
| HECO’s |
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Hawaiian Electric Company, Inc.’s Consolidated Financial Statements, incorporated into Parts I, II and IV of this Form 10-K by reference to pages 23 to 57 of HECO’s Annual Report |
| HECO’s MD&A |
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Hawaiian Electric Company, Inc.’s Management’s Discussion and Analysis of Financial Condition and Results of Operations, incorporated into Parts I, II and IV of this Form 10-K by reference to pages 5 to 21 of HECO’s Annual Report |
| HEI |
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Hawaiian Electric Industries, Inc., direct parent company of Hawaiian Electric Company, Inc., HEI Diversified, Inc., Pacific Energy Conservation Services, Inc., HEI District Cooling, Inc., ProVision Technologies, Inc., HEI Properties, Inc., HEI Leasing, Inc., Hycap Management, Inc., Hawaiian Electric Industries Capital Trust I, Hawaiian Electric Industries Capital Trust II, Hawaiian Electric Industries Capital Trust III, The Old Oahu Tug Service, Inc. (formerly Hawaiian Tug & Barge Corp.), HEI Power Corp. and Malama Pacific Corp. |
| HEI’s |
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Hawaiian Electric Industries, Inc.’s 2002 Annual Report to Stockholders, which is filed as HEI Exhibit 13 and incorporated into this Form 10-K by reference |
| HEI’s |
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Hawaiian Electric Industries, Inc.’s Consolidated Financial Statements, incorporated into Parts I, II and IV of this Form 10-K by reference to pages 37 to 78 of HEI’s Annual Report |
| HEI’s MD&A |
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Hawaiian Electric Industries, Inc.’s Management’s Discussion and Analysis of Financial Condition and Results of Operations incorporated into Parts I, II and IV of this Form 10-K by reference to pages 4 to 31 of HEI’s Annual Report |
| HEI’s 2003 Proxy |
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Portions of Hawaiian Electric Industries, Inc.’s 2003 Proxy Statement dated March 10, 2003, which portions are incorporated into this Form 10-K by reference |
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| HEIDI |
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HEI Diversified, Inc., a wholly-owned subsidiary of Hawaiian Electric Industries, Inc. and the parent company of American Savings Bank, F.S.B. |
iii
GLOSSARY OF TERMS (continued)
| Terms |
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Definitions |
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| HEIII |
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HEI Investments, Inc. (formerly HEI Investment Corp.), a wholly-owned subsidiary of HEI Power Corp. |
| HEIPC |
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HEI Power Corp., a wholly-owned subsidiary of Hawaiian Electric Industries, Inc. and parent company of several subsidiaries. On October 23, 2001, the HEI Board of Directors adopted a formal plan to exit the international power business engaged in by HEI Power Corp. and its subsidiaries. |
| HEIPC Group |
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HEI Power Corp. and its subsidiaries |
| HEIPI |
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HEI Properties, Inc., a wholly-owned subsidiary of Hawaiian Electric Industries, Inc. |
| HELCO |
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Hawaii Electric Light Company, Inc., an electric utility subsidiary of Hawaiian Electric Company, Inc. |
| HITI |
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Hawaiian Interisland Towing, Inc. |
| HTB |
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Hawaiian Tug & Barge Corp. On November 10, 1999, HTB sold substantially all of its operating assets and the stock of Young Brothers, Limited, and changed its name to The Old Oahu Tug Services, Inc. |
| IPP |
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Independent power producer |
| IRP |
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Integrated resource plan |
| Kalaeloa |
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Kalaeloa Partners, L.P. |
| KCP |
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Kawaihae Cogeneration Partners |
| KDC |
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Keahole Defense Coalition |
| kv |
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kilovolt |
| KIP |
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Kalaeloa Investment Partners |
| KPP |
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Kahua Power Partners LLC |
| KWH |
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Kilowatthour |
| LSFO |
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Low sulfur fuel oil |
| MBtu |
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Million British thermal unit |
| MECO |
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Maui Electric Company, Limited, an electric utility subsidiary of Hawaiian Electric Company, Inc. |
| MPC |
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Malama Pacific Corp., a wholly-owned subsidiary of Hawaiian Electric Industries, Inc. On September 14, 1998, the HEI Board of Directors adopted a plan to exit the residential real estate development business engaged in by Malama Pacific Corp. and its then-existing subsidiaries. |
| MSFO |
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Medium sulfur fuel oil |
| MW |
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Megawatts |
| na |
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Not applicable |
| NOV |
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Notice of Violation |
| OPA |
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Federal Oil Pollution Act of 1990 |
| OTS |
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Office of Thrift Supervision, Department of Treasury |
| PCB |
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Polychlorinated biphenyls |
iv
GLOSSARY OF TERMS (continued)
| Terms |
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Definitions |
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| PECS |
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Pacific Energy Conservation Services, Inc., a wholly-owned subsidiary of Hawaiian Electric Industries, Inc. |
| PGV |
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Puna Geothermal Venture |
| PPA |
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Power purchase agreement |
| PSD permit |
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Prevention of Significant Deterioration/Covered Source permit |
| PUC |
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Public Utilities Commission of the State of Hawaii |
| PURPA |
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Public Utility Regulatory Policies Act of 1978 |
| QF |
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Qualifying Facility under the Public Utility Regulatory Policies Act of 1978 |
| QTL |
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Qualified Thrift Lender |
| RCRA |
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Resource Conservation and Recovery Act of 1976 |
| Registrant |
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Hawaiian Electric Industries, Inc. or Hawaiian Electric Company, Inc. |
| ROACE |
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Return on average common equity |
| see |
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When used with reference to the HEI Annual Report, HECO Annual Report, HEI’s Consolidated Financial Statements, HEI’s MD&A, HEI’s Quantitative and Qualitative Disclosures about Market Risk, HECO’s Consolidated Financial Statements, HECO’s MD&A, HECO’s Quantitative and Qualitative Disclosures about Market Risk or HEI’s 2003 Proxy Statement, “see” means that the referenced information is incorporated by reference to those documents |
| SAIF |
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Savings Association Insurance Fund |
| SEC |
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Securities and Exchange Commission |
| SOP |
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Statement of Position |
| ST |
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Steam turbine |
| state |
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State of Hawaii |
| Tesoro |
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Tesoro Hawaii Corp. dba BHP Petroleum Americas Refining Inc., a fuel oil supplier |
| TOOTS |
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The Old Oahu Tug Service, Inc. (formerly Hawaiian Tug & Barge Corp. (HTB)), a wholly-owned subsidiary of Hawaiian Electric Industries, Inc. On November 10, 1999, HTB sold YB and substantially all of HTB’s operating assets and changed its name |
| UIC |
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Underground Injection Control |
| UST |
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Underground storage tank |
| YB |
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Young Brothers, Limited, which was sold on November 10, 1999, was formerly a wholly-owned subsidiary of Hawaiian Tug & Barge Corp. |
v
Forward-Looking Statements and Risk Factors
This report and other presentations made by Hawaiian Electric Industries, Inc. (HEI) and Hawaiian Electric Company, Inc. (HECO) 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 (including future revenues, expenses, earnings or losses or growth rates), ongoing business strategies or prospects and possible future actions, which may be provided by management, 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 assumptions about HEI and its subsidiaries (including HECO 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.
Risks, uncertainties and other important factors that could cause actual results to differ materially from those in forward-looking statements and from historical results include, but are not limited to, the following:
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the effects of international, national and local economic conditions, including the condition of the Hawaii tourist and construction industries and the Hawaii and continental U.S. housing markets; |
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the effects of weather and natural disasters; |
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the effects of terrorist acts, the war on terrorism, potential war with Iraq, potential conflict or crisis with North Korea and other global developments; |
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the timing and extent of changes in interest rates; |
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the risks inherent in changes in the value of and market for securities available for sale and pension and other retirement plan assets; |
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changes in assumptions used to calculate retirement benefits costs and changes in funding requirements; |
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product demand and market acceptance risks; |
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increasing competition in the electric utility and banking industries; |
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capacity and supply constraints or difficulties; |
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fuel oil price changes, performance by suppliers of their fuel oil delivery obligations and the continued availability to the electric utilities of their energy cost adjustment clauses; |
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the ability of independent power producers to deliver the firm capacity anticipated in their power purchase agreements; |
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the ability of the electric utilities to negotiate favorable collective bargaining agreements; |
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new technological developments that could affect the operations and prospects of HEI’s subsidiaries (including HECO and its subsidiaries) or their competitors; |
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federal, state and international governmental and regulatory actions, including changes in laws, rules and regulations applicable to HEI, HECO and their subsidiaries; decisions by the Hawaii Public Utilities Commission (PUC) in rate cases and other proceedings and by other agencies and courts on land use, environmental and other permitting issues; required corrective actions (such as with respect to environmental conditions, capital adequacy and business practices); and changes in taxation; |
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the risks associated with the geographic concentration of HEI’s businesses; |
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the effects of changes in accounting principles applicable to HEI, HECO and their subsidiaries; |
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the effects of changes by securities rating agencies in the ratings of the securities of HEI and HECO; |
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the results of financing efforts; |
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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 rights of American Savings Bank, F.S.B. (ASB); |
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the ultimate net proceeds from the disposition of assets and settlement of liabilities of discontinued or sold operations; |
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the ultimate outcome of tax positions taken by HEI and its subsidiaries, including with respect to ASB’s real estate investment trust subsidiary and HEI’s discontinued operations; |
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the risks of suffering losses that are uninsured; and |
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other risks or uncertainties described elsewhere in this report and in other periodic reports previously and subsequently filed by HEI and/or HECO 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.
vi
| ITEM 1. |
HEI
HEI was incorporated in 1981 under the laws of the State of Hawaii and is a holding company with its principal subsidiaries engaged in the electric utility, banking and other businesses operating primarily in the State of Hawaii. HEI’s predecessor, HECO, was incorporated under the laws of the Kingdom of Hawaii (now the State of Hawaii) on October 13, 1891. As a result of a 1983 corporate reorganization, HECO became an HEI subsidiary and common shareholders of HECO became common shareholders of HEI.
HECO and its operating subsidiaries, Maui Electric Company, Limited (MECO) and Hawaii Electric Light Company, Inc. (HELCO), are regulated electric public utilities providing the only electric public utility service on the islands of Oahu, Maui, Lanai, Molokai and Hawaii. HECO also owns all the common securities of HECO Capital Trust I and HECO Capital Trust II (Delaware statutory business trusts), which were formed to effect the issuances of $50 million of 8.05% cumulative quarterly income preferred securities in March 1997 and $50 million of 7.30% cumulative quarterly income preferred securities in December 1998, respectively, for the benefit of HECO, MECO and HELCO. In December 2002, HECO formed a subsidiary, Renewable Hawaii, Inc., to invest in renewable energy projects.
Besides HECO and its subsidiaries, HEI also owns directly or indirectly the following subsidiaries: HEI Diversified, Inc. (HEIDI) (a holding company) and its subsidiary, ASB, and the subsidiaries of ASB; Pacific Energy Conservation Services, Inc. (PECS); ProVision Technologies, Inc.; HEI Properties, Inc. (HEIPI); HEI Leasing, Inc. (currently inactive); Hycap Management, Inc. and its subsidiary; Hawaiian Electric Industries Capital Trust I; Hawaiian Electric Industries Capital Trust II and III (at all times inactive entities); HEI District Cooling, Inc. (currently inactive); The Old Oahu Tug Service, Inc. (TOOTS); HEI Power Corp. (HEIPC) and its subsidiaries (discontinued operations); and Malama Pacific Corp. (MPC) (discontinued operations).
ASB, acquired in 1988, was the third largest financial institution in the State of Hawaii and had 71 retail branches as of December 31, 2002. ASB has subsidiaries involved in the sale and distribution of investment and insurance products, advertising activities for ASB and its subsidiaries and holding real estate for employee use, and a subsidiary, ASB Realty Corporation, which elects to be taxed as a real estate investment trust and holds assets (primarily loans and mortgage-related securities) of $1.8 billion (see Note 9 to HEI’s Consolidated Financial Statements”).
HEIDI was also the parent company of HEIDI Real Estate Corp., which was formed in February 1998. In September 1999, HEIDI Real Estate Corp.’s name was changed to HEIPI, and HEIDI transferred ownership of HEIPI to HEI. HEIPI currently holds venture capital investments.
PECS was formed in 1994 and currently is a contract services company providing limited support services in Hawaii. ProVision Technologies, Inc. was formed in October 1998 to sell, install, operate and maintain on-site power generation equipment and auxiliary appliances in Hawaii and the Pacific Rim. HEI Leasing, Inc. was formed in February 2000 to own passive investments and real estate subject to leases, but is currently inactive. Hycap Management, Inc., including its subsidiary HEI Preferred Funding, LP (a limited partnership in which Hycap Management, Inc. is the sole general partner), and Hawaiian Electric Industries Capital Trust I (a Delaware statutory business trust in which HEI owns all the common securities) were formed to effect the issuance of $100 million of 8.36% HEI-obligated trust preferred securities in 1997. HEI District Cooling, Inc. was formed in August 1998 to develop, build, own, lease, operate and/or maintain, either directly or indirectly, central chilled water cooling system facilities, and other energy related products and services for commercial and residential buildings, but is currently inactive.
In November 1999, Hawaiian Tug & Barge Corp. (HTB) sold substantially all of its operating assets and the stock of YB for a nominal gain, changed its name to TOOTS and ceased maritime freight transportation operations.
1
For information about the Company’s discontinued operations, see Note 13 to HEI’s Consolidated Financial Statements at pages 73 to 75 of HEI’s Annual Report.
For financial information about the Company’s industry segments, see Note 2 to HEI’s Consolidated Financial Statements at pages 50 to 51 of HEI’s Annual Report.
For additional information about the Company, see HEI’s MD&A, HEI’s “Quantitative and Qualitative Disclosures about Market Risk” and HEI’s Consolidated Financial Statements at pages 4 to 31, 31 to 36 and 37 to 78, respectively, of HEI’s Annual Report.
HEI’s website address is www.hei.com. HEI and HECO currently make available through this website their annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports (since 1994) as soon as reasonably practicable after such material is electronically filed with the SEC.
Electric utility
HECO and subsidiaries and service areas
HECO, MECO and HELCO are regulated operating electric public utilities engaged in the production, purchase, transmission, distribution and sale of electricity on the islands of Oahu; Maui, Lanai and Molokai; and Hawaii, respectively. HECO was incorporated under the laws of the Kingdom of Hawaii (now State of Hawaii) in 1891. HECO acquired MECO in 1968 and HELCO in 1970. In 2002, the electric utilities’ revenues amounted to approximately 76% of HEI’s consolidated revenues.
The islands of Oahu, Maui, Lanai, Molokai and Hawaii have a combined population currently estimated at 1,185,000, or approximately 95% of the population of the State of Hawaii, and comprise a service area of 5,766 square miles. The principal communities served include Honolulu (on Oahu), Wailuku and Kahului (on Maui) and Hilo and Kona (on Hawaii). The service areas also include numerous suburban communities, resorts, U.S. Armed Forces installations and agricultural operations.
The state has granted HECO, MECO and HELCO nonexclusive franchises, which authorize the utilities to construct, operate and maintain facilities over and under public streets and sidewalks. HECO’s franchise covers the City & County of Honolulu, MECO’s franchises cover the County of Maui and the County of Kalawao, and HELCO’s franchise covers the County of Hawaii. Each of these franchises will continue in effect for an indefinite period of time until forfeited, altered, amended or repealed.
For additional information about HECO, see HEI’s MD&A, HEI’s “Quantitative and Qualitative Disclosures about Market Risk” and HEI’s Consolidated Financial Statements, incorporated herein by reference to pages 4 to 31, 31 to 36 and 37 to 78, respectively, of HEI’s Annual Report, and HECO’s MD&A, HECO’s “Quantitative and Qualitative Disclosures about Market Risk” and HECO’s Consolidated Financial Statements incorporated herein by reference to pages 5 to 21, 22 and 23 to 57, respectively, of HECO’s Annual Report.
Sales of electricity
HECO, MECO and HELCO provide the only electric public utility service on the islands they serve. The following table sets forth the number of electric customer accounts as of December 31, 2002, 2001 and 2000 and electric sales revenues by company for each of the years then ended:
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2002 |
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2001 |
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2000 |
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|
Customer |
|
Electric sales |
|
Customer |
|
Electric sales |
|
Customer |
|
Electric sales |
| ||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| HECO |
|
|
283,161 |
|
$ |
865,608 |
|
|
280,911 |
|
$ |
882,308 |
|
|
278,260 |
|
$ |
880,663 |
|
| MECO |
|
|
59,983 |
|
|
191,029 |
|
|
58,840 |
|
|
203,847 |
|
|
57,601 |
|
|
192,823 |
|
| HELCO |
|
|
66,411 |
|
|
191,589 |
|
|
65,241 |
|
|
193,209 |
|
|
63,778 |
|
|
192,174 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
409,555 |
|
$ |
1,248,226 |
|
|
404,992 |
|
$ |
1,279,364 |
|
|
399,639 |
|
$ |
1,265,660 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2
Revenues from the sale of electricity in 2002 were from the following types of customers in the proportions shown:
|
|
|
HECO |
|
MECO |
|
HELCO |
|
Total |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Residential |
|
|
32 |
% |
|
36 |
% |
|
41 |
% |
|
34 |
% |
| Commercial |
|
|
32 |
|
|
35 |
|
|
41 |
|
|
34 |
|
| Large light and power |
|
|
35 |
|
|
29 |
|
|
18 |
|
|
31 |
|
| Other |
|
|
1 |
|
|
— |
|
|
— |
|
|
1 |
|
| |
|
|
|
||||||||||