Hawaii lawmakers push electric utilities to reduce wildfire risks

The state Legislature appears poised to create a new way for Hawaii electric utilities to pay for wildfire risk mitigation that reduces the cost possibly passed onto ratepayers in an effort to help prevent another tragic fire in the state.

The Hawaii House of Representatives voted 41-10 Tuesday to pass legislation originally dubbed the Catastrophic Wildfire Securitization Act, Senate Bill 2922, after the Senate voted 25-0 to pass an earlier draft March 5.

However, more than 1,200 survivors of the Aug. 8 inferno that destroyed most of Lahaina object to Hawaiian Electric, the state-regulated utility serving Maui, being able to charge ratepayers who lost homes, businesses, family and friends for wildfire-related costs, and opposed the bill in testimony not considered by many lawmakers before Tuesday’s vote because it was received late for an April 2 public hearing.

Now it will be up to House and Senate negotiators to possibly agree upon a final draft of SB 2922 with no more opportunities for the public to testify on the legislation, which in addition to heavy admonishment from many Lahaina fire survivors received some support from the state consumer advocate, the office of Gov. Josh Green and others.

Deliberations could be complicated by another pending bill that would do the same thing as SB 2922 but also something else that Lahaina survivors find more objectionable, which is allow an electric utility to recoup expenses from ratepayers for damages stemming from a wildfire.

This measure, House Bill 2700, originally only aimed to establish a state-administered fund to provide compensation for property damage resulting from catastrophic wildfires. But a Senate committee in March added language for wildfire protection plans and how to finance them similar to what SB 2922 proposes.

The full Senate voted 24-1 to pass HB 2700 Tuesday, and now it also awaits a possible House-Senate compromise draft that could become law.

Even for the simpler and less controversial SB 2922, there appears to be misunderstanding by the general public and even some lawmakers about what the bill would do or not do.

SB 2922 would require Hawaiian Electric and the Kauai Island Utility Cooperative to produce and comply with a risk-based wildfire protection plan approved by the state Public Utilities Commission.

The bill also would allow a utility to sell low-interest bonds secured by rate revenue to pay for plan-implementation costs approved by the PUC under its procedures that include public hearings and input from the state consumer advocate.

The bill wouldn’t give an electric utility any new ability to pass along costs to ratepayers. This ability already exists, and is subject to PUC approval. Typically, utility companies are allowed to recover fair and reasonable costs for investments in their systems.

By allowing low-interest bond financing secured by rate revenue, SB 2922 would benefit ratepayers by lowering the utility’s expense for wildfire prevention that the PUC may allow the utility to recover through higher customer bills.

Currently, Hawaiian Electric faces much higher borrowing costs because the Maui disaster led to the company’s credit rating being slashed from investment to junk grade.

“The State needs viable financing options to mitigate the risk of a future catastrophic wildfire occurring,” Michael Angelo, executive director of the Division of Consumer Advocacy, said.