The Hawaii Public Utilities Fee initiated a sweeping inquiry of Hawaiian Electrical Co. this week, and, amongst different issues, ordered the utility to disclose by Monday any legal responsibility insurance coverage the corporate has out there to cowl authorized claims associated to the Aug. 8 fires on Maui.
The fires killed no less than 115 individuals and destroyed 2,200 constructions in Lahaina, with estimated harm of greater than $3 billion.
Hawaiian Electrical faces dozens of lawsuits alleging the corporate’s downed energy traces ignited the fires, and plaintiffs legal professionals have been left to guess how a lot cash could be out there for victims if the corporate is discovered liable. The fits contain property and private harm claims.
With Hawaiian Electrical dealing with doubtlessly large legal responsibility, the corporate’s inventory has plummeted because the Aug. 8 wildfires. Bond ranking companies have downgraded the corporate’s debt to junk bond standing, that means Hawaiian Electrical must pay increased rates of interest to borrow cash at a time when the corporate faces a large rebuilding challenge. The corporate in August introduced it could droop its dividend for the primary time in additional than 120 years.
On Friday, Moody’s Traders Service reported “early indications are that Hawaiian Electrical’s potential liabilities in a worst-case situation could also be bigger than its $2.4 billion of guide fairness.”
In the meantime, in a probable signal of issues to return, a property insurance coverage firm has joined the mob going after Hawaiian Electrical. In its criticism, DB Insurance coverage Co. Ltd. asserts the utility ought to pay the insurer again “for losses paid to its insureds, together with, however not restricted to, property harm (together with house, auto and private property harm), lack of use, lack of income, and different losses and/or damages arising out of the Lahaina Hearth.”
If the varied plaintiffs prevail in opposition to Hawaiian Electrical, it’s going to doubtless arrange a struggle between insurers like DB and the person victims.
Towards this backdrop of Hawaiian Electrical’s monetary struggles and fights over cash, the quantity of Hawaiian Electrical’s legal responsibility insurance coverage protection is especially essential.
“Understanding how a lot insurance coverage any defendant has out there to cowl claims in litigation is vital to understanding a giant a part of what victims and survivors can search to get well down the road,” stated Graham LippSmith, a plaintiffs lawyer who’s in search of class motion certification for a go well with filed in opposition to Hawaiian Electrical.
Hawaiian Electrical declined an interview request on Wednesday; the corporate has till Monday to reply to the PUC.
Questions on Hawaiian Electrical’s insurance coverage protection are only one topic of the PUC’s nine-page letter, which seeks detailed details about a proposed plan, which Hawaiian Electrical submitted in 2022, to strengthen its electrical grids to mitigate dangers related to local weather change.
Formally referred to as the “Local weather Adaptation Transmission and Distribution Resilience Program,” the plan consists of methods to forestall and reduce dangers on account of wildfires, together with different particular actions like hardening transmission traces and poles and eradicating hazardous bushes.
The utility submitted the plan to the PUC in June 2022, initiating an approval course of that routinely takes months or years to finish. The Maui fires have introduced heightened consideration to the proposal.
The PUC’s inquiries to Hawaiian Electrical’s affiliated utilities search to make clear how the Maui fires may change the corporate’s proposed plan. PUC counsel Mark Kaetsu’s questions revolved round a central data request: “Please describe whether or not any of the Corporations’ resilience efforts have been modified or up to date based mostly on the Maui Wildfires. In that case, please clarify intimately.”
These embody detailed questions on how the corporate identifies routine versus non-routine danger mitigation and the way the corporate restores and replaces property because the property put on out.
$95 million Federal Grant Might Be Obtainable
The PUC’s letter additionally seeks details about a possible award of $95 million from the U.S. Division of Vitality, which Hawaiian Electrical can use to implement the Local weather Adaptation Transmission and Distribution Resilience Program, which the corporate initially estimated would price $189.7 million.
In a letter to the PUC dated Tuesday, Hawaiian Electrical wrote that the Division of Vitality grant and PUC approval are interrelated.
“The DOE needs to know whether or not the Corporations will obtain Fee approval to fulfill the Corporations’ IIJA matching fund requirement and, if supplied, what, if any, situations could also be positioned on such approval,” Kevin M. Katsura, Hawaiian Electrical’s director for regulatory non-rate proceedings wrote. “The Corporations additionally perceive that the Fee is interested by understanding what the situations of DOE grant award could also be. As follows, the Corporations respectfully advocate a path ahead to successfully steadiness the respective pursuits and considerations.”
Whereas the $95 million grant might have an effect on easing prices to ratepayers, Hawaiian Electrical’s insurance coverage protection stays a significant query mark. And it’s not simply legal responsibility insurance coverage.
Quoting Hawaiian Electrical, the PUC notes in its letter that Hawaiian Electrical’s overhead and underground transmission and distribution methods usually are not insured in opposition to loss or harm. The corporate asserted that there’s restricted availability of such insurance coverage in the marketplace and that “the premiums are price prohibitive.”
The PUC needs to know what Hawaiian Electrical did “to find out that insuring these property and related losses are ‘price prohibitive.’”
The PUC additionally requested, “Please make clear and determine whether or not the Corporations have another types of insurance coverage (e.g., industrial basic legal responsibility, umbrella, errors & ommissions) which will assist cowl or offset prices related to harm to the Corporations’ property and/or third-partry property or private harm.”
