<PAGE>
 
                                                               HECO Exhibit 10.8








                      LOW SULFUR FUEL OIL SUPPLY CONTRACT


                                 by and between


                              CHEVRON U.S.A. INC.


                                      and


                        HAWAIIAN ELECTRIC COMPANY, INC.


                               * * * * * * * * *

<PAGE>
 
                      LOW SULFUR FUEL OIL SUPPLY CONTRACT
                     BY AND BETWEEN CHEVRON U.S.A. INC. AND
                        HAWAIIAN ELECTRIC COMPANY, INC.

                               TABLE OF CONTENTS
<TABLE>

<S>                      <C>                                              <C>
ARTICLE 1:               Definitions....................................  1

ARTICLE 2:               Term of Contract...............................  1
ARTICLE 3:               Purchase Volumes and Delivery Rates............  1
     Section 3.1:  Purchase Volumes.....................................  1
     Section 3.2:  Delivery Rates.......................................  1

ARTICLE 4:               Quality........................................  2

ARTICLE 5:               Price..........................................  3
     Section 5.1:  Price Per Physical Barrel............................  3
     Section 5.2:  Flexibility in Supply Source.........................  4
     Section 5.3:  Fees, Taxes, Assessments, Levies, etc................  4
     Section 5.4:  Rounding of Index Averages...........................  4

ARTICLE 6:               [INTENTIONALLY OMITTED]........................  4

ARTICLE 7:               Pipeline Delivery..............................  5
     Section 7.1:  LSFO Delivery........................................  5
     Section 7.2:  Determination of Quality.............................  5
     Section 7.3:  Measurement of Quantity..............................  5
     Section 7.4:  Disputes of Quality and Quantity.....................  5

ARTICLE 8:               Marine Delivery................................  6
     Section 8.1:  Notification of Use of HECO's Barbers Point Tankage..  6
     Section 8.2:  Delivery of Marine Cargo.............................  6
     Section 8.3:  Determination of Quantity and Quality................  6
     Section 8.4:  Delayed Invoicing....................................  6

ARTICLE 9:               Line Displacement Stock and Blend Stock........  6
     Section 9.1:  Line Displacement Stock..............................  6
     Section 9.2:  Blend Stock..........................................  6

ARTICLE 10:              Invoicing and Payment..........................  7
     Section 10.1:  Invoices............................................  7
     Section 10.2:  Payments............................................  7
     Section 10.3:  Method of Payment...................................  7

ARTICLE 11:              Contingencies..................................  7
     Section 11.1:  Definition of Contingency...........................  7
     Section 11.2:  Obligations to Sell.................................  8
     Section 11.3:  Obligations to Purchase.............................  8
     Section 11.4:  Price Effectiveness.................................  8
     Section 11.5:  Combustion Specifications...........................  8
     Section 11.6:  Effective Date......................................  9
     Section 11.7:  Refining and/or Delivery Operations Ownership.......  9

ARTICLE 12:              Effect of Suspension or Reduction..............  9
     Section 12.1:  Notice of Suspension or Reduction...................  9
</TABLE>

<PAGE>
 
<TABLE>
<S>              <C>                                                     <C>
     Section 12.2:  Option to Terminate.................................  9
     Section 12.3:  Prompt Notices......................................  9
     Section 12.4:  U.S. Currency.......................................  9
     Section 12.5:  Substitute Suppliers................................  9

ARTICLE 13:      Waiver and Non-Assignability........................... 10
     Section 13.1:  Waiver.............................................. 10
     Section 13.2:  Non-Assignability................................... 10
     Section 13.3:  Definitions......................................... 10

ARTICLE 14:      Default................................................ 10

ARTICLE 15:      Conflict of Interest................................... 10

ARTICLE 16:      Applicable Law......................................... 11

ARTICLE 17:      Public Utility Commission Approval..................... 11

ARTICLE 18:      Miscellaneous.......................................... 11
     Section 18.1:  Headings............................................ 11
     Section 18.2:  Entire Agreement.................................... 11
     Section 18.3:  Contract is Not an Asset............................ 11
     Section 18.4:  Notices............................................. 11
     Section 18.5:  Unenforceable Terms................................. 11
     Section 18.6:  Successors and Assigns.............................. 11
     Section 18.7:  Termination of Prior Agreement...................... 12

</TABLE>

ADDENDUM No. 1:  Sample Price Calculation

ADDENDUM No. 2:  Quality Adjustments

ADDENDUM No. 3:  Recovery of Worldscale Fixed Differential For Oil Pollution
Liability Insurance

<PAGE>
 
                      LOW SULFUR FUEL OIL SUPPLY CONTRACT

THIS CONTRACT dated as of November 20, 1995, by and between CHEVRON U.S.A. INC.,
a Pennsylvania corporation, ("Chevron") and HAWAIIAN ELECTRIC COMPANY, INC., a
Hawaii corporation, ("HECO"), with the purpose for the sale and purchase of Low
Sulfur Fuel Oil ("LSFO") and other petroleum products.

WHEREAS, Chevron is a supplier of petroleum fuels with terminal and refinery
facilities in Hawaii.

WHEREAS, HECO is a utility engaged in the generation and sale of electricity,
with terminal facilities, in Hawaii.

NOW THEREFORE, the parties agree as follows:

                             ARTICLE 1: Definitions

Except where otherwise indicated, the following definitions shall apply
throughout this contract:

               1. "LSFO" means Chevron Low Sulfur Fuel Oil No. 6 per Section
                  4.1.
               2. "physical barrel" means 42 American bulk gallons at 60 degrees
                  F.
               3. "year" means a calendar year.


                          ARTICLE 2: Term of Contract

The term of this Contract shall be from January 1, 1996 (the "Effective Date"),
through December 31, 1997, and shall continue thereafter for additional 12-month
periods (each 12-month period being an "Extension") beginning each successive
January 1, unless HECO or Chevron gives written notice of termination at least
120 days before the beginning of an Extension.


                 ARTICLE 3: Purchase Volumes and Delivery Rates

Section 3.1:  Purchase Volumes

       -----------------------------------------------------------------
        This portion is confidential; therefore, it has been omitted and
                     filed separately with the Commission.
       -----------------------------------------------------------------

Section 3.2:  Delivery Rates

     (a)   HECO shall advise Chevron of its nominated rate of delivery for each
           month seventy-five days prior to the beginning of that month.

     (b)   Except to the extent that marine deliveries which are required by
           Chevron to meet the delivery requirement are prevented by the
           unavailability of HECO's Barbers Point tankage, beginning the 5th day
           of each month, at all times

                                                                          Page 1
<PAGE>
 
           during that month, Chevron's actual LSFO delivery rate, expressed in
           barrels per day, shall not fall below 85% of HECO's nominated volume
           to be delivered in the month of nomination as computed on a month-to-
           date ratable basis, found by multiplying the month of nomination's
           date by the nominated rate of delivery for that month, without the
           express prior agreement of HECO.

     (c)   Chevron and HECO shall make best efforts to coordinate their separate
           LSFO marine and pipeline deliveries into and out of HECO's storage
           tanks at Barbers Point to minimize operational difficulties and
           costs, including but not limited to tankage availability and vessel
           demurrage.

     (d)   Unless waived by HECO, Chevron's marine deliveries of LSFO shall be
           limited to 250,000 barrels, during:

           (i)  any ten day period, and

           (ii) any calendar month, except during months when Chevron's LSFO
                production facilities at Barbers Point are not operating.

     (e)   Unless waived by HECO, Chevron's actual LSFO deliveries during any
           month shall be limited to 200,000 barrels above HECO's nomination for
           that month.

     (f)   Unless waived by HECO, Chevron shall not deliver LSFO from its
           Barbers Point Refinery into HECO's storage tanks at Barbers Point
           during the fifteen (l5) days immediately preceding the scheduled
           delivery of a marine cargo from a vessel chartered by HECO or HECO's
           representative pursuant to the Facilities and Operating Contract
           between Chevron and HECO, as long as Chevron's LSFO can be delivered
           directly to HECO's storage tanks at Kahe, Waiau or Iwilei.


                               ARTICLE 4: Quality

The LSFO delivered hereunder shall comply with the following specifications:

<TABLE>
<CAPTION>
 
    LSFO            ASTM Test               Specification
Specification        Method       Units        Limits
-------------       ---------     -----     -------------
<S>                 <C>        <C>          <C>
API Gravity           D4052       Deg          12 min
                                               24 max
 
Sulfur                D4292       Wt %        0.50 max
 
Flash Point (1)        D93       Deg F         150 min
 
Pour Point             D97       Deg F         125 max
 
Viscosity             D445       SSU at        l00 min
                               210 Deg F       450 max
 
Ash                   D482        Wt %        0.05 max
 
Gross Heating         D240     MM BTU/Bbl     6.000 min
  Value
 
Nitrogen              D4629       Wt %           0.50
 
Water & Sediment      D1796       Wt %           0.50
</TABLE>

Note: (1) Flash point shall be at least 50 degress F above the pour point or 150
degrees F, whichever is greater.

                                                                          Page 2
<PAGE>
 
CHEVRON MAKES NO WARRANTY, EXPRESSED OR IMPLIED IN FACT OR BY LAW, AS TO THE
MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE CONCERNING THE LSFO OTHER
THAN IT SHALL COMPLY WITH THE QUALITY HEREIN SPECIFIED, AND THAT IT SHALL BE
SUITABLE FOR USE AS A BOILER FUEL.


                                ARTICLE 5: Price

Section 5.1: Price Per Physical Barrel

       -----------------------------------------------------------------
        This portion is confidential; therefore, it has been omitted and
                     filed separately with the Commission.
       -----------------------------------------------------------------

                                                                          Page 3
<PAGE>
 
       -----------------------------------------------------------------
        This portion is confidential; therefore, it has been omitted and
                     filed separately with the Commission.
       -----------------------------------------------------------------

Section 5.2:  Flexibility in Supply Source

To provide the flexibility needed by Chevron to meet its obligations to HECO,
the source and type of crude oil and other raw material, the place of
manufacture, and the manufacturer of LSFO for delivery to HECO hereunder shall
be determined solely by Chevron.  The price of all LSFO delivered by Chevron to
HECO hereunder shall be determined in accordance with the terms of this Contract
regardless of where, how and by whom such LSFO is manufactured and regardless of
the type or source of crude oil or other raw materials used in its manufacture.

Section 5.3: Fees, Taxes, Assessments, Levies, etc.

In addition to all other amounts payable by HECO under this Contract, HECO shall
reimburse Chevron for all taxes, assessments, levies and imposts of whatsoever
kind or nature imposed on Chevron by any governmental or quasi-governmental
body, including without limitation the Hawaii General Excise Tax, the Hawaii
Environmental Response Tax, the Customs User Fee, the Federal Superfund Act and
oil spill liability fees, with respect to the sale of product under this
Contract or the receipt by Chevron of payments hereunder.  Notwithstanding the
foregoing, HECO shall not be required to reimburse Chevron for any tax measured
by or based on the net income of Chevron or for real property taxes.  To avoid
duplication of recovery, HECO shall not be required to reimburse Chevron under
this Section 5.3 for any item expressly mentioned by Platt's Oilgram Price
Report or Bunkerwire, or confirmed by Platt's in writing upon inquiry by either
Chevron or HECO, as being included in a price used to compute the billing price
under Section 5.1.

As of the effective date of this Contract, the governmental fees, etc. which are
currently in effect are the Hawaii General Excise Tax (4.167%), the Superfund
Petroleum fee ($0.097 per barrel), the Customs User Fee ($0.002 per barrel), and
the Hawaii Environmental Response Tax ($0.05 per barrel).  The Hawaii General
Excise Tax and the Hawaii Environmental Response Tax will be added to the
invoiced price.  The Superfund Petroleum fee and the Customs User fee will be
added to the LSWR Index of Section 5.1, since Platt's is not currently including
them in their published prices; these fees will not be added to the LA Bunker
index since Platt's is currently including them in their published prices.

Section 5.4: Rounding of Index Averages

All prices, index averages, adjustments thereto and other sums payable hereunder
shall be stated in the nearest thousandth of a dollar.


                                   ARTICLE 6

                            [INTENTIONALLY OMITTED]

                                                                          Page 4
<PAGE>
 
                         ARTICLE 7: Pipeline Delivery


Section 7:1: LSFO Delivery

Delivery of LSFO by pipeline shall be by one of the following methods.

         (a)   Chevron may deliver LSFO by pipeline from Chevron's Refinery into
               HECO's storage tanks at Barbers Point. Title and risk of loss of
               LSFO so delivered shall pass to HECO at the discharge flanges of
               Chevron's main pipeline feeder/blender pumps, P2027 and P2027A,
               where Chevron's piping systems a connect to HECO's LSFO delivery
               line leading to its storage tanks.

         (b)   Pursuant to the Facilities and Operating Contract between Chevron
               and HECO, Chevron may deliver LSFO by pipeline from Barbers Point
               (either Chevron's refinery or HECO's storage tanks) into HECO's
               storage tanks at Kahe, Waiau and Iwilei. Title and risk of loss
               of LSFO delivered from Chevron's refinery shall pass to HECO at
               the discharge flanges of the main pipeline booster pumps at
               Chevron's refinery. Title and risk of loss of the LSFO delivered
               from HECO's storage tanks shall remain with HECO at all times.

HECO agrees to pay a per barrel pipeline pumping fee for the LSFO delivered
under Section 7.1 (b).  The pipeline pumping fees and the measurement of the
pumped quantities are described in the Facilities and Operating Contract between
Chevron and HECO.

Section 7.2: Determination of Quality

The quality of LSFO delivered to HECO shall be determined on the basis of
samples drawn by Chevron in such a manner as to be representative of each
individual delivery.  Samples shall be drawn from Chevron's tanks prior to
delivery to HECO and shall be divided into four parts.  Separate parts shall be
provided to both HECO and Chevron to determine quality.  The remaining parts
shall be sealed and retained separately by Chevron and HECO.

The official heat content determination shall be based upon an average of
Chevron's and HECO's test results, provided that such results fall within the
ASTM reproducibility standard (currently 50,000 BTU per barrel) for Test D-240.
Chevron and HECO will make best efforts to evaluate heat content and exchange
results within 3 working days.  In the event of an unresolvable difference
between HECO and Chevron, HECO's sealed part shall be provided to an independent
laboratory for an official determination, which shall be final.  In cases of
disagreement or excessive delays in HECO's determination of heat content,
Chevron shall have the right to invoice the sale using a provisional heat
content of 6.2 MM BTU per barrel, with any required adjustments made after final
agreement is reached.  Chevron and HECO shall share equally the cost of
independent tests and determinations.

Section 7.3: Measurement of Quantity

Quantities of LSFO and line displacement stock delivered hereunder shall be
determined at the time of delivery by gauging Chevron's tanks before and after
pumping.  Measurements shall be taken by Chevron or Chevron's agent and
witnessed by HECO or HECO's agent.  However, at HECO's option, measurements may
be taken by a mutually agreed upon independent inspector at both Chevron's
refinery and HECO's receiving facilities.  If a mutually agreed upon independent
inspector is used, Chevron and HECO shall share equally the cost of such
independent inspections.  Volumes delivered hereunder shall be converted to 60
degrees F, using the latest revision of ASTM Table 6.

Section 7.4:  Disputes of Quality and Quantity

If Chevron or HECO has reason to believe that the quality or quantity of product
stated for a particular delivery per Sections 7.2 or 7.3 is incorrect, that
party shall within sixty days of the delivery date, present the other party with
documentation supporting such determination and the parties will confer, in good
faith, on the causes for the discrepancy and shall proceed to correct such
causes and adjust the quality and quantity, if justified, for the deliveries in
question.

                                                                          Page 5
<PAGE>
 
                          ARTICLE 8: Marine Delivery

Section 8.1: Notification of Use of HECO's Barbers Point Tankage

Chevron shall provide HECO at least sixty days advanced notice of its planned
use of a specified volume of no more than 300,000 barrels of HECO's storage
capacity at Barbers Point and HECO shall set aside the requested storage
capacity for the purpose of accepting Chevron's marine delivery.  Chevron shall
then provide HECO with weekly updates on the anticipated arrival date of the
marine cargo.  If Chevron is unable to provide sixty days advance notice, HECO
will make all commercially reasonable efforts to provide Chevron with up to
300,000 barrels of storage capacity at Barbers Point.

Section 8.2: Delivery of Marine Cargo

Chevron may deliver the volume of LSFO specified in Section 8.1 from Chevron's
vessel directly into HECO's storage tanks at Barbers Point.  Chevron shall not
deliver more than the specified volume without prior written approval from HECO.
Chevron may not deliver LSFO from Chevron's vessels  directly into HECO's
storage tanks at Kahe, at Waiau or at Iwilei, without HECO's prior written
approval.  Such approval may be given during unusual circumstances, such as
pipeline maintenance.  Title and risk of loss of LSFO shall pass to HECO at the
flanges where Chevron's piping systems connect to HECO's  piping systems for
HECO's tankage at Barbers Point, Kahe, Waiau or Iwilei.

Section 8.3: Determination of Quantity and Quality

The quantity and quality of LSFO delivered by marine vessel shall be determined
in the manner specified in Sections 7.2, 7.3 and 7.4 of this Contract, except as
follows:

     (a) all measurements and samples shall be made and drawn by or under the
         supervision of an independent inspector, and the costs thereof shall be
         shared equally by Chevron and HECO.
     (b) volume shall be determined by gauging HECO's receiving tank(s) before
         and after pumping; and

     (c) samples to determine quality shall be drawn after the LSFO is
         discharged on Oahu.

Section 8.4:  Delayed Invoicing

Invoicing of marine deliveries of LSFO, in any ten day period, shall be limited
to ten times the average daily rate of HECO's nomination for the month against
which the marine delivery applies.


              ARTICLE 9: Line Displacement Stock and Blend Stock

Section 9.l:   Line Displacement Stock.

HECO shall purchase from Chevron whatever line displacement stock that is
required for Chevron to complete the deliveries of LSFO and that is received
into HECO's tankage at Kahe, Waiau and Iwilei.  The price of No. 2 diesel fuel
or No. 6 fuel oil used as line displacement stock shall be the then-current
pricing for the fuel comprising the line displacement stock in Chevron's supply
contract with HECO and HECO's affiliates, if such a supply contract is in
effect; otherwise its price shall be the then-current Honolulu posted price for
such fuel, less normally available discounts, if any, at the time of purchase.
The price of No. 5 fuel oil used as line displacement stock shall be the sum of
40% of the then-current No. 2 diesel fuel pricing and 60% of the then-current
No. 6 fuel oil pricing in Chevron's supply contract with HECO and HECO's
affiliates, if such a supply contract is in effect; otherwise its price shall be
the then-current Honolulu posted price for No. 5 fuel oil, less normally
available discounts, if any, at the time of purchase.  HECO's minimum purchase
obligation and Chevron's maximum purchase obligation set forth in Article 3
shall be reduced by each physical barrel of line displacement stock sold.

Section 9.2:   Blend Stock

In the event HECO desires to adjust the quality of its LSWR in its Barbers Point
tanks to meet the specifications of Article 4, Chevron shall supply the
necessary blend stock pursuant to Addendum 2.

                                                                          Page 6
<PAGE>
 
                       ARTICLE 10: Invoicing and Payment

Section 10.1: Invoices

Invoices, which will show the price per physical barrel of LSFO, blend stock and
line displacement stock sold will be prepared and dated following delivery and
shall be rendered from time to time each calendar month.  The invoices shall
also show as a separate item the estimated amounts of any reimbursements to
which Chevron is entitled pursuant to Section 5.3.

Section 10.2: Payments

Payments of such invoices shall be made in U.S. dollars.  Timing of payments for
sales and deliveries received shall be based upon the invoice issue date which
shall be the invoice date or postmarked mailing date of the invoice, whichever
is later, as follows:

     (a) Payment for a received invoice dated from the 1st through the 10th of a
         month is due on the 20th of the same month.
     (b) Payment for a received invoice dated from the 11th through the 20th of
         a month is due by the last day of the same month.
     (c) Payment for a received invoice dated from the 21st through the last day
         of the month is due on the 10th day of the following month.

Due dates are the dates payments are to reach Chevron.  If the due date falls on
a Saturday, the payment shall be made on the preceding business day.  If such
date falls on a Sunday or a holiday, payment shall be made the following
business day.

Section 10.3: Method of Payment

Payments shall be by bank wire transfer of immediately available funds to:

                              Chevron U.S.A. Inc.
                            Account Number 59-51755
                  First National Bank of Chicago, Chicago, IL
                            ABA Ref. No. 071000013

     For identification purposes, all wires must clearly indicate that payment
     is being made by order of HECO and provide the invoice reference number. In
     addition, written documentation evidencing specific invoices being paid
     shall be immediately forwarded to:

                      Utility Fuel Receivables/Room 3338
                              Chevron U.S.A. Inc.
                                 P.O. Box 7006
                     San Francisco, California  94120-7006
                              Fax (415) 894-1195


                           ARTICLE 11: Contingencies

Section 11.1: Definition of Contingency

As used in this Article 11, the term "contingency" means:

                (a) any event reasonably beyond the control of the party 
                    affected;

                (b) compliance, voluntary or involuntary, with a direction or
                    request of any government or person purporting to act with
                    governmental authority; excluding, however, any such
                    direction or request restricting or otherwise regulating
                    combustion of the LSFO to be purchased by HECO hereunder,
                    the effect of which restrictions or regulation upon the
                    parties' performance shall be governed by Section 11.5 of
                    this Contract;

                (c) total or partial expropriation, nationalization,
                    confiscation, requisitioning or abrogation or breach of
                    government contract or concession;

                                                                          Page 7
<PAGE>
 
                (d) closing of, or restriction on the use of, a port or
                    pipeline;

                (e) maritime peril (including but not limited to, negligence in
                    navigation or management of vessel, collision, stranding,
                    destruction, or loss of vessel), storm, earthquake, flood;

                (f) accident, fire, explosion;

                (g) hostilities or war (declared or undeclared), embargo,
                    blockage, riot, civil unrest, sabotage, revolution,
                    insurrection;

                (h) strike or other labor difficulty (whomever's employees are
                    involved), even though the strike or other labor difficulty
                    could be settled by acceding to the demands of a labor
                    group; or

                (i) loss or shortage of supply, production, manufacturing,
                    distribution, refining, transportation, delivery facilities,
                    receiving facilities, equipment, labor, material, power
                    generation or power distribution caused by circumstances
                    which the affected party is not able to overcome by the
                    exercise of reasonable diligence or which the affected party
                    is able to overcome only at substantial additional expense
                    in relation to the expected revenue, benefits or rights
                    related directly to this Contract.

Section 11.2:  Obligations to Sell

Chevron shall not be obligated to sell or deliver LSFO to the extent that
performance of this Contract is prevented, restricted or delayed by a
contingency which significantly affects Chevron's ability to supply, manufacture
or transport LSFO to HECO under this Contract from Chevron's U.S. West Coast and
Hawaiian refineries.  In such circumstances, deliveries of LSFO to HECO may be
reduced on a basis as equitable to HECO as to Chevron's and its affiliates'
other customers of crude and petroleum products, and Chevron shall not be
obligated to acquire additional crude or LSFO but to the extent that it does
acquire additional crude or LSFO, HECO shall be entitled to an equitable share
of the LSFO acquired or derived from the crude acquired, at a price to be agreed
from time-to-time.

Section 11.3:  Obligations to Purchase

HECO shall not be obligated to purchase, receive or use LSFO to the extent that
performance of this Contract in the customary manner is prevented, restricted or
delayed by a contingency.  In such circumstances, purchases from Chevron may be
reduced on any basis as equitable to Chevron as to HECO's other suppliers of
LSFO.

Section 11.4:  Price Effectiveness

If at any time any price determined under this Contract cannot be given effect
because to do so would violate a direction or request of any government or
person purporting to act with governmental authority, HECO and Chevron shall
attempt to agree on an alternate course of action, but failing agreement within
10 days the party adversely affected may suspend performance with respect to the
quantity of LSFO affected by the direction or request.

Section 11.5:  Combustion Specifications

To the extent that any governmental regulation requires combustion of LSFO
meeting more stringent specifications or permits combustion of LSFO meeting less
stringent specifications than those in Article 4, HECO and  Chevron shall
negotiate in good faith to agree on an alternative course of action that will
allow  HECO to comply with such regulation while purchasing the equivalent of
the full quantity of LSFO it would be required to purchase under Article 3, at a
price and on other terms and conditions that are fair to both parties.  Chevron
shall have no obligation to deliver LSFO meeting new specifications if it is not
available for purchase from third parties and Chevron cannot manufacture such
LSFO in existing facilities without new capital investment. If HECO and Chevron
do not agree on such an alternate course of action, then HECO may comply with
such regulation in any reasonable manner it chooses, including the option to
purchase from other sources for its plants located within the area in which such
regulation specifically applies, fuels which will enable HECO to comply with
such regulation. In such case, HECO's minimum purchase obligations and Chevron's
maximum supply obligations under Article 3 shall be reduced accordingly.

                                                                          Page 8
<PAGE>
 
To the extent HECO is unable to utilize fuel to be supplied by Chevron under
this Contract, but HECO does not purchase fuel which meets such requirements
from other sources in an amount equal to the amount by which deliveries under
this Contract are reduced, then purchases from Chevron may be reduced on any
basis as equitable to Chevron as to HECO'S other suppliers of similar fuel  oil.

Any adjustments in price pursuant to this Section 11.5 shall be governed by
Section 11.6, except that the adjustments shall apply to all LSFO delivered
which meets the new specifications.

Section 11.6: Effective Date

In the event of retroactive adjustments hereunder, the charge or credit to HECO
shall be computed and billed to HECO as soon as practical after the adjustment
is known.  In the event of retroactive changes which cause adjustments hereunder
after termination of this Contract, payment shall be made within 15 days after
receipt of written demand therefor by the other party.


Section 11.7:  Refining and/or Delivery Operations Ownership

Chevron's obligations under this Contract shall be contingent on Chevron's
continued ownership or operation of its refining or delivery facilities in
Hawaii or the U.S. West Coast.  Chevron shall have the right to terminate this
Contract in the event the ownership and operation of its refining and delivery
facilities in Hawaii and the U.S. West Coast are transferred to an entity other
than an affiliate.  Chevron shall give HECO 180 days' written notice.


                 ARTICLE 12: Effect of Suspension or Reduction

Section 12.1:  Notice of Suspension or Reduction

In the event of any suspension or reduction of sales and deliveries under
Article 11, Chevron shall not be obligated to sell and HECO shall not be
obligated to buy, after the period of suspension or reduction, the undelivered
quantity of LSFO which normally would have been sold and delivered hereunder
during the period of suspension or reduction.

Section 12.2:  Option to Terminate

If sales and deliveries are suspended under Article 11 for more than 180 days,
Chevron or HECO shall have the option while such suspension continues to
terminate its obligations to the other party under this Contract on 30-days'
written notice to the other party.

Section 12.3:  Prompt Notices

Any party which relies upon Article 11 shall give the other party prompt notice
thereof specifying the anticipated amount and duration of any suspension or
reduction of deliveries.  It shall also give prompt notice when it no longer
expects to rely on Article 11 and deliveries shall be reinstated subject to all
conditions of this Contract, unless this Contract has been terminated previously
under Section 12.2.

Section 12.4:  United States Currency

Nothing in Article 11 shall relieve HECO of the obligation to pay in full in
United States currency for the LSFO sold and delivered hereunder and for other
amounts due by HECO to Chevron under this Contract.

Section 12.5:  Substitute Suppliers

While deliveries are suspended or reduced by Chevron pursuant to Article 11, it
shall not be a breach of this Contract for HECO to buy from a supplier other
than Chevron the quantities of LSFO which Chevron does not deliver.  During this
period of time there will be no minimum volume requirements.  After any
suspension or reduction has ended, minimum and maximum volume requirements of
Article 3 for the annual period in which the suspension or reduction occurred
will be reduced in proportion to the ratio of the number of days within the
annual period during which no suspension or reduction was in effect, to the
number of days within the annual period.

                                                                          Page 9
<PAGE>
 
                   ARTICLE 13: Waiver and Non-Assignability

Section 13.1: Waiver

Waiver by one party of the other's breach of any provision of this Contract
shall not be deemed a waiver of any subsequent or continuing breach of such
provisions or of the breach of any other provision or provisions hereof.

Section 13.2: Non-Assignability

This Contract shall not be assignable by either party without the written
consent of the other, which shall not be unreasonably withheld, except that
either party may assign this Contract to any affiliate, provided that any such
assignment shall not release that party from any of its obligations hereunder,
and except that HECO may assign this Contract to the Trustee under its First
Mortgage Bond Indentures.  Chevron does not, by agreement to such an assignment,
waive any right it may have to terminate this Contract for any breach hereof
occurring at any time before or after any such assignment or release HECO of any
obligations arising under this Contract after any such assignment.  Following
any such assignment, no further assignment may be made without the consent of
Chevron.

Section 13.3: Definitions

In this Article 13 and Sections 11.2 and 11.7, "affiliate" shall mean any
corporation controlling, controlled by or under common control, with either
Chevron or HECO.  "Control" of a corporation shall mean ownership, directly or
indirectly, or at least 50% of the voting shares of such corporation.


                              ARTICLE 14: Default

If HECO or Chevron considers the other party to be in default of any obligation
under this Contract, such party shall give the other party notice thereof.  Such
other party shall then have 30 days in which to remedy such default.   If the
default is not cured, the other party may, without prejudice to any other right
or remedy of such party in respect of such breach, terminate its obligations
under this Contract, except for HECO's obligation to pay in full in United
States currency for the LSFO sold and delivered hereunder and for other amounts
due by HECO to Chevron under this Contract by 45 days notice to the party in
breach.  Any termination shall be without prejudice to accrued rights.  All
rights and remedies hereunder are independent of each other and election of one
remedy shall not exclude another.

In no event shall either party be liable for any indirect, consequential,
special or incidental damages of any kind whether based in contract, tort
(including without limitation negligence or strict liability), warranty or
otherwise.


                       ARTICLE 15: Conflicts of Interest

Conflicts of interest related to this Contract are strictly prohibited. Except
as otherwise expressly provided herein, neither party nor any director, employee
or agent of a party shall give to or receive from any director, employee or
agent of the other party any gift, entertainment or other favor of significant
value, or any commission, fee or rebate.  Likewise, neither party nor any
director, employee or agent of a party shall enter into any business arrangement
with any director, employee or agent of the other party (or any affiliate),
unless such person is acting for and on behalf of the other party,  without
prior written notification thereof to the other party.

In the event of any violation of this Article 15, including any violation
occurring prior to the date of this Contract which resulted directly or
indirectly in one party's consent to enter into this Contract with the other
party, such party may, at its  sole option, terminate this Contract at any time
and, except for obligations to pay in full in United States currency for the
outstanding payment obligations hereunder, shall be relieved of any further
obligation under this Contract.

Both parties agree to immediately notify the other of any known violation of
this Article.

                                                                         Page 10
<PAGE>
 
                          ARTICLE 16: Applicable Law

This Contract shall be construed in accordance with, and all disputes arising
hereunder shall be determined in accordance with, the local law of the State of
Hawaii, U.S.A.


                ARTICLE 17: Public Utility Commission Approval

This Contract is required to be filed with the Hawaii Public Utilities
Commission ("PUC") for approval.  If in the proceedings initiated as a result of
the filing of this Contract, the PUC disapproves or fails to authorize the
recovery of the fuel costs incurred under this Contract through HECO's "Energy
Cost Adjustment Clause", HECO may terminate this Contract by 30 days written
notice to Chevron.


                           ARTICLE 18: Miscellaneous

Section 18.1: Headings

Headings of the Articles and Sections are for convenient reference only and are
not to be considered part of this Contract.

Section 18.2: Entire Agreement

This document contains the entire agreement between the parties covering the
subject matter and cancels, as of the effective date hereof, all prior
agreements of any kind between the parties covering such subject matter and any
amendments thereto.  There are no other agreements which constitute any part of
the consideration for, or any condition to, either party's compliance with its
obligations under this Contract.

Section 18.3: Contract is Not an Asset

This Contract shall not be deemed to be an asset in, and, at the option of a
party, shall terminate in the event of any voluntary or involuntary
receivership, bankruptcy or insolvency proceedings affecting the other party.

Section 18.4: Notices

Except as otherwise expressly provided herein, all notices shall be given in
writing, by letter, facsimile, telegraph or telex to the following addresses, or
such other address as the parties may designate by notice, and shall be deemed
given upon receipt.

            Seller:     Manager, Petroleum Coke, Heavy Fuels & Sulfur
                                                 Chevron U.S.A. Inc.
                                                 P.O. Box 7006
                                                 San Francisco, CA  94120-7006
                                                 Facsimile:  (415) 894-1195

            Buyer:      Manager, Power Supply Services Department
                                                 Hawaiian Electric Company, Inc.
                                                 Box 2750
                                                 Honolulu, HI  96840-0001
                                                 Facsimile:  (808) 543-7788

Section 18.5:  Unenforceable Terms

If any term or provision, or any part of any term or provision, of this Contract
is held by any court or other competent authority to be illegal or
unenforceable, the remaining terms, provisions, rights and obligations shall not
be affected.

Section 18.6:  Successors and Assigns

This Contract shall inure to the benefit of and be binding upon the parties
hereto, their successors and permitted assigns.

                                                                         Page 11
<PAGE>
 
Section 18.7:  Termination of Prior Agreement

Effective as of the Effective Date of the Term hereunder, this Contract hereby
supersedes that certain Low Sulfur Fuel Oil Supply Contract between the parties
dated May 29, 1990, and all amendments thereto.

          IN WITNESS WHEREOF, the parties hereto have executed this Low Sulfur
Fuel Oil Supply Contract as of the day and year first hereinabove written.

CHEVRON U.S.A. INC.                              HAWAIIAN ELECTRIC
                                                 COMPANY, INC.

By     /s/ Phillip H. Fisher                     By     /s/ Edward Y. Hirata
       Phillip H. Fisher                                Edward Y. Hirata
                                                        (Printed or Typed Name)
 
Its Manager, Petroleum Coke                      Its    Vice President
       Heavy Fuels & Sulfur                             Regulatory Affairs

                                                 By     /s/ M. M. Egged
                                                        Molly M. Egged
                                                        (Printed or Typed Name)

                                                 Its    Secretary

                                                                         Page 12
<PAGE>
 
                                ADDENDUM No. 1
                           Sample Price Calculation
                                   July 1995


     * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ *
     This portion is confidential; therefore, it has been omitted and
     filed separately with the Commission.
     * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ *
<PAGE>
 
                                                                  Addendum No. 1

                     LONDON TANKER BROKERS' PANEL LIMITED



Directors:                                          Prince Rupert House
E. F. Shawyer (Chairman)                            64 Queen Street
M. G. Johnson                                       LONDON EC4R 1AD
A. G. Burgess
R. W. Park                                          Telephone:  0171-248 4747
P. C. Delaney                                       Telex:  885118 G
C. Waaler                                           Fax:  0171-489 0536
R. W. Porter (Managing)



                                       1st June 1995



Hawaiian Electric Company Inc
P. O. Box 2750
Honolulu HI 96840-0001
Hawaii



Attn:  Mr. J. C. Aicken Dir. Fuel Resource

Dear Sirs

                                     AFRA

The results of the monthly average freight rate assessments made over the period
16th April 1995/15th May 1995 are as follows:
 
MEDIUM RANGE     (25,000/ 44,999 (LONG) TONS)  WORLDSCALE  161.6
LARGE RANGE 1    (45,000/ 79,999 (LONG) TONS)  WORLDSCALE  120.3
LARGE RANGE 2    (80,000/159,999 (LONG) TONS)  WORLDSCALE   87.8
VLCC             (160,000/319,999 (LONG) TONS)   WORLDSCALE   54.9
ULCC             (320,000/549,999 (LONG) TONS)   WORLDSCALE   43.1

We would remind you that, in accordance with the agreement between us, these
assessments are provided to you on the condition they will not be reproduced,
supplied or disclosed to any other person.

Yours faithfully
LONDON TANKER BROKERS' PANEL LIMITED

/s/ R.W. Porter
R. W. Porter
Managing Director
<PAGE>
 
                                ADDENDUM NO. 2
                              Quality Adjustments


     * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ *
     This portion is confidential; therefore, it has been omitted and
     filed separately with the Commission.
     * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ *
 

<PAGE>
 
     * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ *
     This portion is confidential; therefore, it has been omitted and
     filed separately with the Commission.
     * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ * ~ *
 
<PAGE>
 
                                ADDENDUM NO. 3
Recovery of Worldscale Fixed Differential For Oil Pollution Liability Insurance

The price formula for LSFO in Section 5.1 of the Contract includes the component
"FREIGHT" that refers to a Worldscale 100 rate published in the current edition
of Worldscale which incorporates a Fixed Rate Differential to reflect the cost
of additional premiums for Oil Spill Liability Insurance on vessels carrying
Persistent Oils applicable to voyages having a destination in the U.S.A..
Chevron acknowledges that any vessel used to transport LSFO that is sold and
purchased under the Contract, including its components and the crude oil from
which the LSFO is derived, shall be required to possess oil spill liability
insurance coverage in the amount of $700 million.

The price formula component "FREIGHT" refers to an AFRA rate applicable to a
vessel size classification of LR-1, or Large Range 1.  This vessel
classification references tanker vessels ranging in size from 45,000 Long Tons
Deadweight to 79,999 Long tons Deadweight.  In order to derive an approximation
of the relationship between Deadweight and Gross Registered Tons for a nominal
vessel consistent with the mathematical average of this vessel size
classification, the average of two vessels that have transported LSFO or its
components to Hawaii in the recent past that are approximately equal to the
midpoint of the LR-1 range were referenced.  These vessels are described as
follows:

<TABLE>
<CAPTION>
 
        Name          Deadweight Tons (DWT)  Gross Registered Tons (GRT)
 
<S>                   <C>                    <C>
M/T London Spirit             62,097                   36,865
M/T London Victory            62,156                   36,865
 
Average                       62,127                   36,865
</TABLE>

The Worldscale 100 rate that is to be included in the computation of FREIGHT is
to be derived in the same manner as the following illustrative example
calculations:

1.  The Worldscale 100 rate in effect from February 19, 1995, shall include a
Fixed Rate Differential which shall be the sum of a. and b. and shall be
computed as follows:

     a. Fixed Rate Differential with respect to the additional insurance
        premiums For Basic $500 million coverage of Oil Pollution Liability
        Insurance on vessels carrying Persistent Oils to and from the U.S.A.

        Fixed Rate Differential  =  $0.27/GRT X 36,865 GRT
                                            62,127

                                 =  $0.160 per Metric Tonne

        For illustrative purposes, this rate may be expressed in U.S. dollars
per barrel as follows:

                                 =    $0.160/Metric Tonne
                                    6.75 barrels/Metric Tonne

                                 =  $0.024/barrel

     b. Fixed Rate Differential with respect to the additional insurance
        premiums for Excess $200 million coverage of Oil Pollution Liability
        Insurance on vessels carrying Persistent Oils to and from the U.S.A.

        Fixed Rate Differential  =  $0.2225/GRT X 36,865 GRT
                                              62,127

                                 =  $0.132 per Metric Tonne

        For illustrative purposes, this rate may be expressed in U.S. dollars
per barrel as follows:

                                 =    $0.132/Metric Tonne
                                    6.75 barrels/Metric Tonne
 
<PAGE>
 
                                 =    $0.020/barrel

The sum of which shall equal $0.2920 per Metric Tonne, or $0.044 expressed in
U.S. dollars per barrel.

2.   The AFRA Worldscale Points and their related Worldscale 100 rate applicable
for each calendar quarter are based upon an average of the three monthly AFRA
publications in the calendar quarter immediately preceding the calendar quarter
of the nominated month of delivery.  Therefore the relevant Fixed Rate
Differentials computed above should be applied as follows:

     A.   With respect to volumes of LSFO nominated during the three (3) months
of the quarter following a change in the published rate (typically February of
each year), the relevant Fixed Rate Differential to be included in the
computation of the price component "FREIGHT" shall be the sum of:
 
          50/90 multiplied by the Fixed Rate Differential computed prior to the
          rate change:

          and 40/90 multiplied by the Fixed Rate Differential computed using the
          revised rate:
 
     B.   With respect to volumes of LSFO nominated for subsequent months,
and continuing for so long as the Fixed Rate Differentials as set forth in
Worldscale Circular shall be applicable, the relevant Fixed Rate Differential to
be included in the computation of the price component "FREIGHT" shall be as
derived in part 1 above.