Hawaii lawmakers look for ways to mitigate costs of future disasters

by Kim Jarrett, The Center Square, April 4, 2024

Lars Johnson told Hawaii lawmakers he still has difficulty talking about the fires in Maui and finds it hard to understand why he may be forced to pay for a new disaster plan on his utility bill.

The former Lahaina resident is one of the victims of the August fires and is opposed to a bill allowing Hawaii's utility provider to use securitization bonds to pay for changes that would mitigate costs if another disaster were to strike. The utility company could add a fee of up to 5% of the total bill to help fund the bonds. The Hawaii Public Utilities Commission will determine how much customers pay.

Senate Bill 2922 also requires electric companies to submit wildfire protection plans to the commission.

"Making ratepayers to pay for the cost of their negligence and mismanagement is not the way to go," Johnson told the House Finance Committee this week.

Hawaii Electric is facing several lawsuits, including one filed by Maui County that alleges the company did not shut off electricity before the fires despite a red flag warning.

Jim Alberts, senior vice president and chief operations officer for Hawaiian Electric, called securitization a "time-tested best practice for financing large investments."

"It's done in many states, it's done in many governments," Alberts told the committee. "And we think this it's a good fit for the process here today."

The utility company has a low credit rating that keeps them from accessing capital, according to Alberts.

Rep. Gene Ward asked Alberts if the bill is the "best we can do."

"This is what we need to do to survive," Alberts said.

A second bill would establish the Hawaii Wildfire Relief Fund and Hawaii Wildfire Relief Fund Corporation.

Senate Bill 3344 doesn't list a specific amount for the fund. Jason Benn, senior vice president and chief information officer for Hawaii Electric, told the committee the goal is $1 billion, with the utility company contributing one-third of the total. The state contribution is estimated at $9 million, Benn said. Other public utilities and landowners could also contribute, according to the bill.

The bill would repay catastrophic costs no matter who is at fault, according to the bill.

Several Hawaii residents submitted identical letters of support.

"In addition, this bill would protect the creditworthiness of the state, counties, large landowners and utilities that contribute to the fund," the letters said. "This bill’s purpose is to rein in the financial uncertainty created by the risk of future catastrophic wildfires."

Both bills previously passed the Senate and now go to the full House of Representatives for consideration.

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SB2922: Text, Status “The purpose of this Act is to establish and implement the Catastrophic Wildfire Securitization Act, to allow public utilities to securitize rates in order to raise capital that can be used to pay for costs and expenses arising out of catastrophic wildfires, providing a vital source of liquidity and preserving the public utilities' financial viability.”

SB3344: Text, Status “Establishes the Hawaiʻi Wildfire Relief Fund and Hawaiʻi Wildfire Relief Fund Corporation to provide compensation for property damage resulting from catastrophic wildfires in the State.”

RELATED: S.2132 - 118th Congress (2023-2024): Catastrophic Wildfire Prevention Act of 2023 | Congress.gov | Library of Congress