This week, members of the Legislature took a stand that wasn’t easy and certainly wasn’t popular with everyone. By voting for Senate Bill 897, they recognized the importance of minimizing costs to customers while ensuring the resilience and safety of electric utility services at a time of increasing wildfire threats.

Hawaiʻi is now one of 15 states whose legislatures have passed or are considering utility-related wildfire legislation, most with some element of a limit on liability. This legislation is much different from what Hawaiian Electric originally sought and doesn’t include some of the significant elements they had proposed. Nonetheless, the final proposal puts customer needs first and attempts to balance the interests of many other stakeholders, including Maui fire survivors and future plaintiffs, insurers, legal advocates and landowners.

The need to respond collectively in real time to address the evolving risk and liability for all stakeholders impacted by wildfires is imperative. This measure protects the future of Hawaiʻi’s economy and communities and critics who claim that this effort falls short of holding utilities accountable don’t understand the rapidly evolving paradigm affecting more and more states.

More directly, no one is getting bailed out. There’s no customer cost to creating a wildfire liability cap for Hawaiian Electric and Kauai Island Utility Cooperative. Utilities have to serve everyone and they can’t say it’s too dangerous or too financially risky. This bill will potentially save customers millions of dollars by enabling long-term borrowing at lower rates. For others impacted by wildfire liability risk, such as government entities and large landowners, this bill ensures the application of proportional liability so each party’s liability is capped at their proportional fault.

Even more savings and protection from wildfires can be realized with the approval of a financing tool called securitization, which is also part of SB 897. Thirty states currently authorize utilities to use securitization, which provides funding at lower interest rates than traditional borrowing. 

The bill authorizes the Public Utilities Commission to issue long-term bonds by utilities to finance up to $500 million in wildfire safety, resilience and reliability infrastructure. By securitizing the financing of this critical work into one fund spread across the five islands Hawaiian Electric serves, the costs to neighbor island customers can be lowered.

The process for setting a liability cap and approving securitization ensures transparent oversight by the PUC in consultation with the Consumer Advocate and participation by the public. The legislation requires the PUC to ensure the utilities are accountable for public safety and are liable for the maximum amount possible in the event of a future wildfire, only limited by ensuring the delivery of essential electric utility services and not hurting utility customers. The liability cap also requires the approval of the governor. These checks and balances were elements of SB 897 that legislators insisted upon.

As climate risks increase, so does the complexity of the utility business. Doing nothing is the worst choice we can make.  Legislators stepping up are being active architects of the system we all need to secure Hawaii’s future. We need legislators who are willing to lean in and frame Hawaiʻi’s collective resilience, recognizing the nature of our island economy and the close interdependence amongst each other. It takes courage to do that. The end of the legislative session is not the end – this has to be an evergreen effort to ensure we are protecting Hawaiʻi and its people.