Hawaii

Hawaii Is Bailing Out Its Wildfire-Causing Energy Company

Published

6 months ago

February 10, 2024

Hawaii Is Bailing Out Its Wildfire-Causing Energy Company

Last August, a deadly wildfire tore through Hawaii, erasing the town of Lahaina and killing over one hundred people. The state’s publicly traded utility corporation was found responsible; it is now facing a deluge of claims from residents seeking compensation for damages, as well as lawsuits from the insurance companies that have been paying out disaster claims.

Hawaii’s electricity is provided by a for-profit utility supplier that is granted monopoly power over energy distribution. In addition to its dominance of Hawaii’s power grid, Hawaiian Electric Industries, Inc., (HEI) enjoys almost complete autonomy in the physical management of its power lines on the islands of Oahu, Hawaii, Maui, Lanai, and Molokai. Only residents of the island of Kauaʻi maintain some semblance of control over their electricity, through a resident-owned energy cooperative.

When massive winds from Hurricane Dora blew into Maui, HEI subsidiary Maui Electric Company (MECO) refused to respond to early calls to shut down the grid. This came even as fire-safety officials warned that a flash drought put most of the state in a Red Flag Warning, the highest possible fire alert issued by the National Weather Service.

More than thirty power lines went down as winds battered the island, but MECO remained silent — apparently refusing to cut power to downed lines that were sparking fires. In the fallout of the fires, it came to light that MECO had not properly insulated wires or maintained poles and surrounding vegetation. These are standard precautionary measures in most states, especially ones with significant wildfire and windstorm risk. Many lines were bare — i.e., lacking any insulation at all — a direct violation of state regulations dating back to 2002 that significantly increased the probability of ignition in surrounding vegetation.

Now, as HEI struggles to pay for damages, state regulators look set to bail out the negligent utility company.

Five months after the fire, legal fees, disaster relief bills, and settlements are piling up. A battery of personal claims against HEI prompted 142 insurance companies, including USAA, State Farm, Island Insurance, and Tradewind, to seek reimbursement for over $1 billion in claims they had paid to residents as of December 2023. The companies are following the lead of Maui County, which similarly filed suit against HEI on the grounds that the corporation’s negligence is to blame for property damage and loss of life.

Recent analysis estimates HEI could be on the hook for over $4.9 billion when the ashes clear. The corporation itself was only insured up to $165 million, a drop in the bucket compared to what they owe in damages combined with what insurers are seeking in reimbursement.

This scheme by insurance companies puts them in league with individual residents and the county in civil suits against HEI. This is not uncommon in catastrophe underwriting, as insurance companies will leave no stone unturned in trying to mitigate losses from natural disasters.

To that end, insurers often use gray areas in coverage to deny consumers’ claims related to flood or hurricane damage. But as the $1 billion in insurance payouts suggest, the insurance companies don’t seem to be fighting consumers’ claims. When it’s evident that a battery of claims cannot be denied, will not be sufficiently covered by reinsurance (the insurance that insurance companies themselves take out to protect against significant losses), and cannot be stalled in court, industry-wise lawyers will go after the next best offering: in this case, the utility company left holding the bag.

Soon after the announcement that the company had failed to de-energize its grid, the corporation’s long- and short-term bond ratings were downgraded by two of the “Big Three” credit-rating agencies, with Fitch lowering HEI’s grade to B on Rating Watch Negative and S&P lowering it to B-. The third of the Big Three, Moody’s, put HEI “under review for downgrade.” This means that lending companies would charge extremely high rates on anything HEI borrowed to pay its bills, whether those bills be to the people of Hawaii, state conservation efforts, insurance lawsuits, an infrastructure overhaul, or disaster relief funds.

But HEI has an important friend ready to help: the state of Hawaii. On January 23, state legislators introduced measures drafted by HEI to safeguard the company from bankruptcy by allowing it to raise costs to residents and issue a new bond covering the costly bill for starting the wildfire. Essentially, the state plans on issuing a low-APR, no-limit credit card that HEI can use to pay its bills, with minimal risk to the long-term financial health of the corporation. The monopoly’s survival is crucial to the state of Hawaii, which would lose 95 percent of its electrical coverage should HEI go bankrupt and cease operations. It is also crucial to the company’s boardroom.

Some supporters of the bailout say it is ultimately the best bet for residents of Hawaii, so long as the bonds are used to fund grid updates rather than lawsuits from insurance companies. The current deal would allow HEI to push the cost of the bonds — including interest — onto residents immediately; supporters argue that this would theoretically allow for avoidance of massive consumer rate hikes, which would inevitably follow in the long term should HEI be forced to borrow on the open market. Better to start paying a little bit extra over many years than a lot extra years down the road, when it comes time to pay back the high-rate bonds. But this crowd ignores the bigger picture — that the private debt of a for-profit company will be foisted on consumers regardless.

Whether in the short or long term, consumers are being made liable for the fire, the immediate costs, and the ensuing market fallout. Even if a resident receives an insurance payout, the insurance company is passing the ball to HEI, which is passing it to the state, which is ultimately turning it back over to the resident.

HEI vice president of corporate communications James Kelly claims that the utility doesn’t intend to use the bond proceeds to cover legal claims. But the state is not imposing any safeguards to ensure this, and there are no mechanisms to enforce transparency. In fact, legislators seem to have the opposite in mind — litigation and settlement costs are explicitly covered by the bonds.

An important question for Kelly, then, is how the utility does intend to process over $4.9 billion in legal claims if its current equity and insurance backing is so insufficient as to require a generous bailout by Hawaii residents. Why else would HEI directly include litigation and settlement contingencies in the legislative measure the company itself drafted, if not to use the bonds to cover those costs?

Pacific Gas and Electric Company — California’s energy utility — went through its own equity crisis following the 2018 Camp Fire. That fire resulted in at least eighty-five deaths and was found to be the result of similarly mismanaged power lines. A recent decision by the California judiciary hopes to save their for-profit energy corporation from the same type of bankruptcy facing HEI with big rate hikes, brought about by an $11 billion insurance settlement.

Both disasters might have been avoided with state-run utilities or publicly held energy cooperatives, which would be democratically accountable to residents. Had there been public, democratic oversight in place of a concern with profit maximization, HEI might have taken measures that prevented the wildfires from starting in the first place — like implementing the 2002 infrastructure regulation. Hawaii could take notes from the publicly owned New York Power Authority (NYPA), for instance. NYPA is the lowest-cost energy provider in New York State, which is theoretically bound by regulations set by the state comptroller.

Instead, Hawaiian consumers are not only bearing the burden of loss of life, land, and property caused by corporate negligence — they’re being forced to pick up the bill for the corporation’s negligence too. Here, utility deregulation has taken to such an extreme that the company at fault is allowed to build its own legislative life raft. This state of affairs is par for the course with private utilities: Hawaii needs HEI as the owner and operator of the vast majority of the state’s electrical grid. Yet the utility needs the state of Hawaii to help it avoid being eaten by the bigger fish it exposes itself to as a profit-generating corporation. Until utilities are publicly controlled, corporate boardrooms will dictate who ultimately pays utilities’ financial burden.

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Hawaii

Woman charged for prohibited rifle, ammo discovered during traffic stop

Published

59 mins ago

July 26, 2024

Press Room

Woman charged for prohibited rifle, ammo discovered during traffic stop

HONOLULU (HawaiiNewsNow) – Hawaii County’s prosecuting attorney said a Hilo woman has been charged with prohibited possession of a rifle and ammo as well as felony drug offenses.

Police said Jackie Carter, 30, was arrested and charged following a vehicle traffic stop off Kilauea Avenue.

According to police reports, after executing a search warrant of the vehicle Carter was driving, officers recovered a Remington bolt action rifle and live .243 ammunition.

Officials said Carter was charged with the following offenses:

Ownership or possession of a firearm prohibited
Ownership or possession of ammunition prohibited
Promoting a dangerous drug in the third degree (possess any amount of methamphetamine)
Promoting a dangerous drug in the third degree (possess any amount of oxycodone hydrochloride)
Promoting a harmful drug in the fourth degree (possess any amount of alprazolam)
Driving without a license
Not having no-fault insurance

The prosecutor’s office said Carter faces a penalty of a five-year prison term or four years probation and up twelve months in jail.

Officials said she remains in custody in lieu of $84,000 bail.

Police ask anyone with information on the incident to call CrimeStoppers at (808) 961-8300.

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Hawaii

‘Bring my A game’: Hawaii surfer Carissa Moore hopes to defend her Olympic gold title

Published

8 hours ago

July 26, 2024

Press Room

‘Bring my A game’: Hawaii surfer Carissa Moore hopes to defend her Olympic gold title

HONOLULU (HawaiiNewsNow) – Carissa Moore is the most decorated competitive surfer in Hawaii’s history, topping former World Champs John John Florence, Andy Irons and Sunny Garcia.

And she’s the only Hawaii surfer to ever win Olympic gold in surfing.

Of course, Duke Kahanamoku won multiple medals, but those were in swimming.

“It was super, super special to you know, I felt like through the Olympic journey, last time, I felt like I got to learn a lot about Duke Kahanamoku and his legacy and feel a deeper connection and pride for where I come from, the place treally raised me, the waves, my community and being able to like, represent and surf for something bigger than myself,” Moore said.

Moore competed in the 2020 Tokyo Summer Olympics, which was held in 2021 due to the pandemic, and became the first-ever winner of the Olympic gold medal in women’s shortboard surfing.

“Obviously getting to win in Tokyo in 2021 was so so special. But so many things had to fall into place. And so I don’t really feel too much pressure to have to back it up,” she said. “The Olympics far exceeded my expectations that I had, it was the first time so I didn’t really know what was going to happen or how it was gonna change surfing or, you know, if it was just gonna be like another CT event.”

“But it definitely did feel like a bigger stage.”

That’s in the rear view mirror now. Since the landmark victory, Moore has been able to get some me-time.

Previous Coverage: Carissa Moore is stepping away from competitive surfing, but she left a lasting impact

“So I, I’ve actually got to have a few months to just relax and go to Japan with my Nana and my sister. And, you know, I decided to step away from competing full time this year to focus on the Olympics, but also have some time to like, do other things. So it’s been a nice balance of both,” Moore explained.

In preparation for the Olympics, Moore has been logging a considerable amount of time training down in Tahiti on a wave that is not for the faint of heart.

“It’s one of the most intense, intimidating, challenging waves to surf, you really have to have a high level of skill to like read the wave and navigate the steep takeoff. And obviously, there’s a huge risk involved. There’s a shallow reef and you could get very hurt, but you could also have the ride of your life. Comfortable level is, you know, it’s getting there. I think the more than I spend time at the wave and hopefully learn and, and you know, just get the reps up, that will help me to feel more confident. But at this point, I don’t, I don’t know if you can ever feel like 100% comfortable,” Moore said.

Then there’s the competition, the best of the best will be there, including one Tahitian woman who has the luxury of a home break advantage.

“Everyone’s earned their spot and are very, very talented and experienced,” Moore said. “And I’m gonna have to bring my A game if I want to do well there and put in the work.”

Among Moore’s accolades is 11 national titles, five world titles and the Olympic gold title. While she’s a fierce competitor in the water, Moore says it takes a lot to tap into that side of her.

“It’s definitely not natural for me to like, just be super competitive, or confrontational. But like, you have to have a little bit of that like hunger and drive and fire and like get up close and personal at times,” she added.

When asked if another Olympic gold medal could a be trigger back to competing for the world championship again, she responded:

“I don’t know honestly, I haven’t really thought too much further than this summer I’m just trying to really simplify things… I will definitely give myself some space to kind of figure out what I want to do next.”

Win or lose, Moore’s next move will involve her Moore Aloha Foundation which aims to help girls and women navigate the waves of mental health and wellness, and create a life of positivity, purpose and passion.

Her message to young people?

“If I had any advice to the young ones coming up, or just anyone in general, I think just this belief that anything really is possible with hard work and dedication and a lot of love and a lot of aloha. Yeah, you can achieve your wildest dreams. I truly believe that.”

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Hawaii

Big expansion of Hilo Harbor entrance still in the works – West Hawaii Today

Published

15 hours ago

July 26, 2024

Press Room

Big expansion of Hilo Harbor entrance still in the works – West Hawaii Today

A $62 million plan to expand the entrance to Hilo Harbor still needs some time in the oven.

The state Department of Transportation last year received $15 million to acquire several privately owned parcels on Kalanianaole Street for the project.

The five parcels under consideration are directly adjacent to the harbor property and would allow DOT to develop additional traffic lanes between Kuhio and Kahana streets and more off-street space for semitrucks. The buildings on those parcels would be demolished.

According to a draft environmental assessment published in June 2023, expanding the entrance to the harbor is necessary to alleviate the heavy traffic in the area, where cargo vehicles, cruise ship passengers and nearby school traffic all frequently coincide.

The draft EA states the project would allow the harbor to separate cargo traffic and cruise ship passengers and improve emergency escape routes out of Keaukaha.

The final draft EA was scheduled for release by the end of 2023. More than halfway through 2024, that final draft has not been published, although DOT has stated it’s coming soon.

DOT spokeswoman Shelly Kunishige said the final draft should be published this fall, adding that the delay was because the consultants writing the report are taking into account the large amount of public testimony submitted during the draft assessment’s public comment period.

While that public testimony is still not publicly available, the project was unpopular among Keaukaha property owners during public outreach efforts last year. The five parcels being considered for state acquisition total 9.38 acres, and are home to several businesses that would be displaced if the project goes through as written.

During a public hearing about the draft assessment last year, Greg Gadd — who owns or controls four of the five parcels — said the state has undervalued the land. The assessment estimated that the five parcels together are worth $15 million to $17 million.

The draft EA states that DOT can acquire the parcels via condemnation, wherein the state can seize private property for a project, with due compensation to the owners.

Nani Vermillion, agent for Gadd’s Big Island Homes and Land, said via email earlier this month there has been no further communication from the state about the project since last year.

The five parcels include a trio of lots just over 1 acre each on the downtown Hilo side of the harbor entrance, and a 5.55-acre and a 0.74-acre parcel on the Keaukaha side.

Establishments on those parcels include Maikai Auto Body &Paint, Hilo Auto Sales &Rentals, Hilo Food Hub, Ocean Front Kitchen, Service Rentals and Supplies Inc., and Zion’s House of Praise Holiness Church.

The assessment acknowledges the businesses within the parcels will have to relocate or cease to exist, but adds that they will have more than two years to do so before any demolition takes place.

The document estimated that once the final assessment is published, acquisition of the parcels would be completed within two years, with design and construction to begin subsequently and take two to three years.

Based on that time frame, the assessment estimated the project would be completed by 2029. But because that estimate was predicated on the assumption that the final assessment would be published by the end of 2023, the actual completion date is presumably 2030 or beyond.

The full project cost, including the cost of acquiring the parcels, is estimated to be around $62 million.

Email Michael Brestovansky at mbrestovansky@hawaiitribune-herald.com.

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