The fires in Maui have had a devastating human toll (111 dead, 1000 missing as of this writing). It is not surprising that it’s raising some questions about the role of Hawaii’s utility (Hawaiian Electric/HECO) played in the disaster.
While it will take time to sort out the investigation and the class action lawsuit, it’s clear that investors and Hawaiian Electric management are scrambling, with the WSJ reporting that Hawaiian Electric is now talking to restructuring advisors to explore their next steps, in a crisis that very much parallels the series of wildfires that were ultimately blamed on Northern California utility PG&E and resulted in bankruptcy proceedings.
Utilities now face three simultaneous problems (arguably of their own making):
- climate change escalating the risks of catastrophic wildfires and storms
- utilities across the country having aging energy infrastructure
- homeownership patterns, disaster insurance coverage & premiums, and utility risk management plans built for a pre-climate-change risk environment
The smart ones will be proactively overhauling their processes and infrastructure to cope with this. The less smart ones will potentially be dragged kicking and screaming into this world in much the same way that PG&E and Hawaiian Electric currently are.
Hawaiian Electric is speaking with firms that specialize in restructuring advisory work, exploring options to address the electric utility’s financial and legal challenges arising from the Maui wildfires, said people familiar with the matter.
Hawaiian Electric is facing a selloff in its stock and bonds, and has been hit with lawsuits alleging that its actions both before and during the wildfires exacerbated the devastation Maui residents have suffered.
Hawaiian Electric is in Talks with Restructuring Firms
Alexander Gladstone | WSJ