The company faces scrutiny for not shutting down the power prior to the fire. Lawyers have wasted no time filing lawsuits.

Authorities have yet to conclude what caused the fire that tore through Lahaina, leaving at least 110 people dead, but the utility that powers most of Hawaii is already facing mounting legal and financial problems related to the Maui disaster. 

How those troubles will affect Hawaiian Electric Co., its customers, and its ability to bolster the islands’ power grid against future destructive fires remains to be seen. But following a similar deadly fire in California, ratepayers saw their electricity costs go up and many of the fire’s victims were not made whole after the utility declared bankruptcy. 

At least four lawsuits have been filed in the past week against HECO seeking damages for victims of the Aug. 8 fire — the deadliest wildfire in more than 100 years in the U.S. – and more are expected to appear. They allege the company caused the blaze and that it should have turned off its power lines ahead of the fierce wind storms that were forecast that week, as some utilities on the mainland have started to do.

HECO crews install utility poles and lines on Honoapiilani Highway Wednesday, Aug. 16, 2023, in Lahaina. A wildfire destroyed the historic town of Lahaina last week. (Kevin Fujii/Civil Beat/2023)
HECO crews install utility poles and lines on Honoapiilani Highway on Wednesday in Lahaina. A wildfire destroyed the historic town last week, and the utility faces heavy scrutiny for what role its poles played in the disaster. (Kevin Fujii/Civil Beat/2023)

The company has also seen its stock plunge in recent days by more than 40% and its credit rating downgraded to junk as HECO faces growing scrutiny over what role its power lines played in the disaster. Video footage from the morning of the blaze shows dangling power lines amid burning brush on Lahaina’s upland edge. 

Investors worry the Hawaii utility might eventually be found liable for billions of dollars in damage related to the fire. On Wednesday, The Wall Street Journal reported that HECO has already reached out to firms that could advise it in financial restructuring. A spokesman for the utility declined to comment when asked whether that was the case.

At a joint press conference held with Gov. Josh Green and emergency officials Monday on Maui, HECO CEO Shelee Kimura said that the utility plans to launch its own investigation into what happened, and that it will cooperate with a separate state probe into what caused the fire.

“I think we all believe it’s important to understand what happened, and I think we all believe it’s important to make sure it doesn’t happen again,” Kimura said. Out of the utility’s 750 power poles in West Maui, 400 were either damaged or destroyed in the fierce winds and fires, she added.

‘Power Line Just Went Down’

As authorities and HECO each investigate, video footage shot the day of the fire has emerged in recent days and heightened public scrutiny of the power lines.

Video recorded by Lahaina resident Shane Treu the morning of Aug. 8 suggests that the blaze that eventually grew into the Lahaina fire ignited in the dry grass just south of the intersection of Lahainaluna Road and Ho’okahua Street.

Treu’s video captures downed power lines dangling in the burning area. “Fricken power line just went down,” Treu narrates in the video, which was seen widely on social media. “That’s the power line that started it.”

The area, just below Lahaina Intermediate School, was still hot Sunday afternoon, with a foot-wide patch of ash smoking, live coals underneath. Just six inches over, new green grass was already sprouting up through blackened stubs.

The HECO power station mauka of the Lahaina Bypass sits directly above the charred remains of a large wildfire Sunday, Aug. 13, 2023, in Lahaina. A large fire consumed areas of West Maui last week. Utilities have not been fully restored.  (Kevin Fujii/Civil Beat/2023)
The HECO power station mauka of the Lahaina Bypass sat directly above the charred remains of a large wildfire on Sunday. A large fire consumed areas of West Maui last week. (Kevin Fujii/Civil Beat/2023)

Meanwhile, just downhill of a Maui Electric Co. switching station, in the direction of Tuesday’s strong winds, a field of charred grass stumps along the station’s width stretched out below the power lines downhill and toward Lahainaluna Road. A utility pole was seared and the sheath around its electrical cable appeared violently burned. A new tag on it reads, “Danger. Do not operate.” HECO runs Maui Electric.

That’s where the first fire started and was put out, said Pomai Balagso, 33, whose house looks mauka onto the area. A photo she took from a bedroom window shows the fire still small between 6:30 a.m and 6:45 a.m. She said the power went out around 3 a.m., came back before 6 a.m., then shut off again 20 to 30 minutes later, when the first fire started.

“They put it out, they cut a fire break, but the fire was so hot that it was already in the ground,” she said. “But by the time the flare-up happened, the Fire Department had already called it contained and safe, so they left. Not even 20, 30 minutes after they left is when the flare-up started.”

Then the wind blew sparks downhill and started a second fire, Balagso said, which she could see out her south-facing window. The blackened ground ran down to the hill, jumped the Lahaina Bypass, and continued on to town.

HECO would not say whether it’s investigating if the substation contributed to the fire.

The Camp Fire: A Similar Tragedy In California

It’s too early to say whether HECO will ultimately be liable for some or all of the damages associated with the Lahaina fire.

The company isn’t the only party under heavy scrutiny. At least one of the class-action suits, filed by a group of Oahu-based lawyers, also names Maui County as a defendant for what the suit says was the county’s failure to address the threat of wildfires and protect Maui residents, despite numerous warnings of the risk.

Still, a similar deadly fire in California in which heavy winds blew down power lines illustrates how the situation could develop should HECO be responsible.

Pacific Gas & Electric was found liable for that state’s 2018 Camp Fire, which killed 85 people. The utility declared bankruptcy and then agreed to a $13.5 billion settlement with victims as it looked to emerge from Chapter 11 protection.

Jennifer Potter: HECO’s credit downgrade could make it harder to access money for urgent grid improvements in the wake of the Lahaina wildfire.

The utility — the largest in California — has since been able to start upgrading its power lines and equipment to reduce the threat of wildfires in areas that are getting hotter and drier due to climate change, said Michael Picker, former president of the California Public Utilities Commission.

But after going bankrupt, the utility had to raise its rates, in part for the grid upgrades that included burying some 10,000 miles of power lines underground, Picker said. That switch from overhead to underground can cost around $10 million a mile, he added.

The bankruptcy deal that restructured PG&E has also prevented many of the Camp Fire victims and their families from receiving full compensation, Picker said.

“It’s not a friend of the victims,” Picker said of such bankruptcy deals. “It tends to pay off investors and bond holders (who) come first.”

HECO’s downgraded credit rating could also make it more difficult and expensive for the utility to access money for the urgent grid upgrades that will be needed to protect Hawaii from future wildfires and other threats, said Jennifer Potter, a former member of the state’s Public Utilities Commission.

“The damage that’s done to the credit of the company is one that would jeopardize their ability to get capital out of the market. I think that’s the biggest danger right now to those improvements,” Potter said Monday. “No one wants to buy shares of a bankrupt utility.”

Civil Beat asked HECO whether the utility had any safeguards in place to keep providing reliable service — plus improve the grid — if it’s also forced to pay a hefty settlement. In a statement, HECO said it’s “committed to help Maui recover no matter how long it takes.”

It declined to comment on the lawsuits. Read the complaint brought by Oahu-based attorneys here:

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