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Yuki Iwamura

The multibillion-dollar liabilities faced by Hawaiian Electric for the deadly wildfire in Maui — compounded by Maui County’s <a href="https://www.washingtonpost.com/national/2023/08/24/maui-hawaii-wildfires-electric-utility/ec969c74-42c0-11ee-9677-53cc50eb3f77_story.html" target=_blank>lawsuit against the utility on Thursday</a> — are reverberating through the electricity industry and are forcing a reckoning for power companies and their customers, nationwide.

Hawaiian Electric, which serves nearly all of Hawaii’s 1.4 million residents, is careening toward insolvency, much like <a href="https://www.washingtonpost.com/technology/2019/01/14/pge-file-bankruptcy-following-devastating-california-wildfires/" target="_blank">Pacific Gas &amp; Electric did in California in 2019</a>. Investors in the company are scrambling to sell their shares, and bond rating agencies are downgrading the Hawaii utility’s ratings because of its role in potentially causing or contributing to the <a href="https://www.washingtonpost.com/climate-environment/2023/08/11/maui-fire-death-toll-compared-us-wildfires/" target="_blank">most deadly U.S. wildfire in a century. </a>

It is a pattern playing out with <a href="https://www.washingtonpost.com/nation/2022/01/05/dixie-fire-pge-cause-investigation/" target=_blank>frequency </a>across the West, and likely to spread to other states as much of the electricity industry finds itself unable or unwilling to meet the growing challenge of adapting power systems to<a href="https://www.washingtonpost.com/climate-environment/2023/08/23/extreme-weather-climate-change-poll/" target=_blank> extreme weather</a>. In Texas this week, the power grid is again on the brink, with officials urgently <a href="https://www.texastribune.org/2023/08/24/texas-ercot-power-grid-conservation-request/" target=_blank>asking customers to reduce usage</a>, even after upgrades were made in the wake of the electricity system’s collapse in winter storms in 2021 that left 200 people dead.

In Hawaiian Electric’s case, <a href="https://www.washingtonpost.com/climate-environment/2023/08/12/maui-fire-electric-utility/" target=_blank>it did not power down its lines</a> in advance of expected hurricane-force winds, a major focus of lawsuits filed against it by Maui County and other litigants.

“It is just crazymaking that we all know we will back in the same place in a year, talking about another city destroyed, by another utility using the same excuses, the same playbook and probably even the same faulty equipment from the 1980s,” said Jay Edelson, an attorney who recently helped secure Oregon wildfire victims a landmark verdict against the power company PacifiCorp. “Why do these companies keep making these decisions? I don’t understand what is going on in these boardrooms.”

Hawaiian Electric is hardly an outlier in the power industry. Companies routinely put off acting on warnings of wildfire risk made by their own safety teams and government agencies. Like other companies, Hawaiian Electric did not follow through on recommendations to better fireproof systems. Nor did it follow the lead of California utilities implicated in tragic wildfires that have <a href="https://www.pge.com/en_US/residential/outages/public-safety-power-shuttoff/learn-about-psps.page" target=_blank>since installed technologies </a>to stop the flow of electricity when extreme winds approach power lines vulnerable to ignition.

The Hawaii company said in a recent regulatory filing that shut-off programs could leave firefighting crews unable to pump water and “jeopardize the health and safety of the elderly, the disabled and those most in need.” The company, which Fitch Ratings says could face liabilities exceeding $3.8 billion, has brought in financial advisers but wrote in the filing that its “goal is not to restructure the company but to endure as a financially strong utility.”

When a power company is under siege, its entire region suffers. They are not like other corporations that can easily be replaced by competitors if they misbehave and get hit with financially crippling legal judgments. The cost of mistakes by power companies typically flows back to their customers and taxpayers.

Tamir Kalifa

In Hawaii, where electricity is considerably more expensive than the rest of the nation, there’s a risk that if prices further soar then wealthy homeowners and big commercial customers will disconnect in favor of off-grid solar and battery systems, further destabilizing the utility.

But in many ways, Hawaiian Electric’s predicament stems from an industry-wide phenomenon: The sudden increase of extreme weather events requires swift action from companies that have never been eager to innovate. It also exposes dysfunction in the outdated way utilities are policed by government, according to experts, and raises tough questions about what trade-offs ratepayers might be willing to accept for a safer power network.

“We have been planning our electricity systems to deal with problems we have dealt with in the past, not for the future,” said Melissa Lott, a senior research scholar at Columbia University’s Center on Global Energy Policy. “Requiring climate risk be considered in electricity system planning is something we can do. We have those technologies. They are accessible. We just have to require that they are used.”

As the Maui fires raged, senior victims had to fend for themselves

Some of those technologies are more costly than others. Burying power lines underground is among the most effective ways to keep them from sparking a fire. But the costs are massive, up to $5 million per mile. The entire budget for “hardening” the grid against wildfires in Maui was $15 million.

“Even if this utility had done all that it proposed to do, Lahaina still would have burned down,” said Michael Wara, an energy scholar at Stanford University’s Woods Institute for the Environment. “The thing that would have kept people alive is a power shut-off program. The only costs involved are weather stations and paying people to interpret the data to determine when things should be shut off.”

He said that use of backup mini grids and batteries can easily remedy concerns that firefighters might have losing electricity to pump water, or that elderly people have about being unable to power medical devices.

“There is no reason utilities have to cause fires in high-wind events,” Wara said. “Yes, it is inconvenient when they turn off power for safety reasons. But we need to break this cycle where in order to do the right thing a utility must first burn down a community. More than the Hawaiian utility needs to learn a lesson from what happened in Lahaina.”

There have been many wake-up calls lately for the industry.

Only weeks before the inferno on Maui, PacifiCorp <a href="https://www.opb.org/article/2023/06/12/oregon-wildfire-verdict-pacificorp-labor-day/" target=_blank>was found liable by a jury</a> for sparking deadly wildfires in 2020. About 17 homeowners were awarded $73 million, prompting PacifiCorp’s own attorney to say in court that the verdict could leave the company on the hook for more than $20 billion in damages in fires that burned 2,454 properties. The company is appealing. Analysts warn PacifiCorp could be sunk financially by the lawsuits.

The judgment came as another big power provider, Xcel Energy, is battling eight lawsuits alleging it touched off the 2021 Marshall blaze in Colorado, that state’s most destructive wildfire. There are more than 500 plaintiffs seeking damages from the company. Earlier, PG&amp;E’s neglect of wildfire safety forced the company <a href="https://www.sfchronicle.com/california-wildfires/article/PG-E-pleads-guilty-to-84-counts-of-involuntary-15344269.php" target=_blank>to plead guilty to 84 counts of manslaughter</a> and pushed it into bankruptcy after its transmission line sparked the 2018 Camp Fire, which killed 85 people and destroyed nearly 19,000 homes and other buildings.

Power lines likely caused Maui’s first reported fire, video and data show

The pattern suggests the byzantine system through which power companies are regulated is not meeting the moment. It is cumbersome and slow, more focused on protecting ratepayers than public safety. The process for utilities getting sign-off on any major expenditure is tangled in red tape, and the rules are designed so that utilities can make the most money pushing safety projects that are not the most practical or speedy.

“The companies will tell you that all they care about is reducing fire risks, but there are economics involved,” said Severin Borenstein, director of the Energy Institute at the University of California at Berkeley’s Haas School of Business.

Burying power lines is considered a major capital expenditure, Borenstein said, for which utilities are guaranteed a hefty rate of return, paid by ratepayers. Even where impractical, it is a lot more financially attractive to the companies than shorter term measures such as clearing brush and deadwood near power lines, or installing shut-off systems.

Mike Blake

Longtime fire safety consultant Joseph Mitchell, who helped force San Diego Gas &amp; Electric to install one of the nation’s most innovative wildfire protection systems following a catastrophic 2007 fire, said he’s dismayed to see utilities lobbying for costly undergrounding programs when there are more efficient solutions.

Protective coating on power lines, he said, can be combined with advanced technologies that detect problems and shut electricity off to significantly cut down fire risk at a manageable cost for ratepayers.

The problem, he said, is regulators and company executives in too many parts of the country are still gambling that fires won’t come their way. In Maui, <a href="https://www.washingtonpost.com/weather/2023/08/22/maui-fire-2018-lahaina-warning/" target=_blank>a place more frequently associated with hurricanes</a> and cyclones, wildfire protection appeared to rank low on the utility’s priority list.

“It is pretty clear just looking at the public record that the utility had identified wildfire as one of the risks they needed to manage,” said Doug McLeod, the former energy commissioner in Maui. “There was some amount of argument being made that the risk was lower in Hawaii because we had no lightning. In hindsight, it is clear the risk was quite high.”

Bay Area-based PG&amp;E had long argued that it did not need to spend as heavily on fire safety as utilities to its south, due to different weather and geologic conditions. Then came the Camp Fire, which led to the company’s criminal conviction and bankruptcy.

“As we have more extreme weather conditions around the globe, people who have not had to think about this before are going to have to start thinking about it,” Mitchell said.

But it is not just a challenge for regulators reluctant to tinker with the thicket of decades-old policies that underpin a functioning power system, or company officials reluctant to make expenditures that undercut profits. Power customers also play a big role.

It is another part of the economy where adapting to global warming may require some inconvenient changes in behavior. In this case, it could mean putting up with intermittent power disruptions. Hawaiian Electric chief executive Shelee Kimura said in a news conference that “even in places where this has been used, it is controversial, and it’s not universally accepted.”

Etienne Laurent

California’s experiment confirms as much. Mitchell said about 700,000 customers a year experience a disruption through Pacific Gas &amp; Electric’s shut-off program. That number should drop as the company improves the technology, but customers are unhappy in the meantime.

“When utilities start shutting down power they get huge blowback,” Borenstein said. “They shut off my power last week. Within minutes, people on Nextdoor were like, ‘What the hell? Why are they doing this?’”

Utilities are already unpopular, he said, and they are reluctant to make moves that further erode their standing with customers.

But their survival may depend on it. Hawaiian Electric is a case in point. As Fitch Ratings considers the company’s future, it noted the threat created by mounting lawsuits has quickly become “existential.”

Bates College, B.A. in Rhetoric

 Columbia University, M.S. in Journalism

Evan Halper is a business reporter for The Washington Post, covering the energy transition. His work focuses on the tensions between energy demands and decarbonizing the economy. He came to The Post from the Los Angeles Times, where he spent two decades, most recently covering domestic policy and presidential politics from its Washington bureau.

Evan Halper

Hawaiian Electric may collapse after fires, forcing reckoning for utilities

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