Hawaiian Electric seeks expert assistance, but no plans for restructuring.
Seeking Expert Advice: Hawaiian Electric Industries Faces Scrutiny
By Arunima Kumar and Arshreet Singh
(Reuters) – Hawaiian Electric Industries, the largest power supplier in the US island state, is under increasing scrutiny following the devastating Maui wildfires. However, the company made it clear on Friday that their goal is not to restructure the utility.
Despite recent challenges, Hawaiian Electric Industries saw a surge in its shares, rising over 7% to $12.91 in volatile early trading. This comes after the company’s shares had plummeted by more than half since the Aug. 8 wildfires that ravaged the coastal Maui town of Lahaina, claiming the lives of at least 110 people.
Moody’s Investors Service, a prominent ratings agency, downgraded Hawaiian Electric Industries’ credit rating to junk status earlier in the day. This follows a similar downgrade by S&P Global Ratings. Investors are concerned about the potential financial and legal repercussions related to the wildfires.
While the company did not explicitly state the purpose of seeking expert advice, it emphasized that it is a standard practice for companies in such situations. In a filing, Hawaiian Electric Industries stated, ”Like any company in this situation would do, and as we do in the normal course of business, we are seeking advice from various experts.”
When asked for further details about their decision to seek expert help, Hawaiian Electric Industries did not respond.
The Honolulu-based company is currently facing class-action lawsuits that allege its culpability for the fires. The lawsuits claim that the utility failed to shut off power lines despite warnings of high winds that could potentially cause wildfires.
Hawaiian Electric Industries defended its actions, stating that shutting off power was not part of its high-wind management protocol. The company explained, “Preemptive, short-notice power shutoffs have to be coordinated with first responders, and in Lahaina, electricity powers some of the pumps that provide the water needed for firefighting.”
According to Wells Fargo analyst Jonathan Reeder, most North American utilities do not have a formal Public Safety Power Shutoff program that outlines when and if such a drastic measure should be taken. He added, “Shutting off power is not an easy decision for a utility to make as there are widespread ramifications to safety when doing so.”
Unlike California, Hawaiian Electric Industries stated that there is no precedent in Hawaii for applying ”inverse condemnation” to a private party like an investor-owned utility. In California, this legal concept exposes utilities to liabilities from wildfires regardless of their negligence, as long as their equipment is involved.
While Hawaiian Electric Industries may not have a real precedent to rely on, there is significant legal uncertainty surrounding the situation, according to Reeder.
As of Thursday, approximately 1,900 customers in West Maui were still without electricity, according to Hawaiian Electric Industries. This figure does not include the approximately 2,600 homes and businesses that were destroyed, representing less than 1% of the company’s customers.
(Reporting by Arshreet Singh, Arunima Kumar and Shreyashi Sanyal in Bengaluru; Editing by Arun Koyyur)
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