Hawaiian Electric Industries (HE) slipped more than1% Monday following a Barron’s report saying shares of the utility company could fall 20%, below the 52-week low of $22.71, as it struggles to keep a lid on customers who switch to less-expensive solar power. The report says Hawaii’s largest utility may find itself in a tight spot as it continues to distribute a hefty dividend with a 4.4% yield, warning that it may have to issue new debt or equity just to foot the dividend payout.
For every customer who installs a solar-powered system, users who rely solely on oil are required to pay a larger share to maintain the electric grid in Hawaii, Barron’s says. According to Hawaiian Electric Industries, non-solar users paid an additional $31 last year because of solar defectors.
The company plans to implement a new pricing system, charging a base fee with additional fees imposed on users with solar systems. While these plans are still being debated, it is unlikely that such plans will lower customer bills in the near term. If the plans are scrapped by the utilities commission, the company may face a cash-flow deficit, which could put pressure on Hawaiian Electric to raise debt or equity or cut its dividend payout. In early afternoon trade, HE shares were off 1.3% at $27.82, moving away from the top end of the 52-week range of $22.71-$28.49.