Hawaiian Electric Rises on Bill to Securitize Fire Costs

(Bloomberg) -- Hawaiian Electric Industries Inc.’s shares rose on Tuesday after state lawmakers introduced a bill that would allow the company’s electric utility to sell recovery bonds backed by customer rates to cover costs from the deadly Maui wildfire. 

Hawaiian Electric, whose shares have been battered since the August 2023 wildfire, climbed 4.5% to close at $13.35 in New York. 

The Hawaii measure, if passed by the state legislature, would allow Hawaiian Electric to raise capital through a process called securitization where bonds are sold to cover large expenses that can be paid off over a long period of time. The funds in this case would be used for costs related to fire mitigation plans, contributions to disaster relief funds and payments for litigation and settlements, according to the proposed legislation. 

Research firm Capstone LLC estimated Hawaiian Electric could face as much as $4.9 billion in liabilities as multiple lawsuits have been filed against the utility, blaming its power lines for causing the fire last year that razed the historic seaside town of Lahaina and killed at least 99 people. 

The securitization bill will face an uphill battle given its potential significant ratepayer impacts, tight deadlines for passage and the high level of controversy surrounding a perceived bailout of Hawaiian Electric, Capstone analysts Josh Price and Alyssa Lu said in a research note published Tuesday. 

Other utilities including PG&E Corp. and Edison International’s Southern California Edison have used securitization to pay for large wildfire claims. 

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