Committee advances wildfire-liability measure after hours of debate; utilities say caps needed to restore credit, opponents warn of undercompensation

The House Committee on Finance advanced Senate Bill 897 SD3 HD2 following extensive testimony and rounds of questioning that illustrated deep disagreement among stakeholders over liability caps, securitization tools and how to protect consumers and wildfire victims.

Hawaiian Electric testified in strong support, pressing that limiting future wildfire liability and enabling securitization or a wildfire recovery fund are critical to restoring the utility's credit rating, securing lower-cost financing for grid upgrades and protecting customers from high long-term costs. Jason Ben of Hawaiian Electric said the bill would help the utility avoid higher-cost power purchase agreements and would support investments in safety and resilience; company witnesses noted that Hawaiian Electric committed to pay its $2 billion share of the August 8 settlement without customer contributions.

Opponents, including the Hawaii Association for Justice (HAJ), argued the liability caps proposed in the measure are among the most aggressive nationwide and risk undercompensating victims. Evan Oye for HAJ said the caps, which in part tie limits to tax-assessed valuations, would leave many victims with insufficient recovery because assessed values often undercount the full costs of rebuilding and do not capture non-property losses. HAJ urged alternatives such as presumptions based on compliance with mitigation measures and cautioned against capping damages at levels that do not allow communities to rebuild.

Other stakeholders were split: insurers and some consumer advocates raised concerns about the design of caps and potential impacts on insurance markets, while labor groups, utilities, and some energy-industry commenters supported the bill as a tool to protect the utility's financial viability and enable needed investments. Kauai Island Utility Cooperative, Clearway Energy, AES Hawaii and IBEW testified in support with requested clarifying amendments for applicability to smaller co-ops and cooperative governance.

Credit and financing questions were a central theme in committee Q&A. Utility witnesses said the company's credit ratings dropped to non-investment grade after August events and that restoring ratings is a multi-step process: settling past claims, funding a recovery mechanism, and addressing physical wildfire risk through capital investments. Hawaiian Electric said it has already spent significant sums on wildfire mitigation and plans continued investments, and that the bill, paired with a wildfire recovery fund study, would help lower financing costs and hence customer rates over time.

Committee action and votes: The committee voted to advance SB 897; the discussion indicated the measure would continue to be negotiated in conference committee. At the decision session the committee recommended the bill pass (recommendation adopted) and recorded reservations from some members (Representative Reyes Oda and Representative Alcos were noted with reservations). Testimony and committee debate indicated the measure does not apply to past claims and that the proposal centers on future liability rules and the design of a recovery mechanism.

Why it matters: The bill addresses how to allocate the financial risk of future wildfire events involving utility infrastructure, balancing victims' recovery rights, utility solvency, and the cost of capital for critical grid investments.

Next steps: The measure advances with committee recommendation; sponsors and stakeholders signaled that further negotiation will occur in conference to refine caps, carve-outs (for wrongful death and physical injury), and the structure of any recovery fund or securitization mechanism.

Sources: Testimony from Hawaiian Electric (Jason Ben), Hawaii Association for Justice (Evan Oye), Kauai Island Utility Cooperative, Clearway Energy, IBEW; committee deliberations and decision-making transcript.