Committees advance securitization bill for wildfire mitigation; members clarify liability limits and protections for personal-injury claims

The House Consumer Protection & Commerce Committee, sitting jointly with Judiciary & Hawaiian Affairs, advanced S.B.897 (S.D.3, H.D.1) on March 18 with multiple amendments intended to enable securitized financing for wildfire-mitigation infrastructure while clarifying liability and implementation details.

Committee amendments direct that the $500 million securitization amount apply to Hawaiian Electric Industries (HEI) as a holding company rather than $500 million for each subsidiary, narrow the securitization applicability to electric utilities (not all public utilities), exempt securitization from HRS 269-17 as described in testimony, and add a requirement that the Hawaii Emergency Management Agency director may determine whether a wildfire qualifies as a “catastrophic wildfire” for statutory purposes. The chair also asked that the bill include language clarifying the damage-cap wording so the aggregate limitation does not apply to wrongful death and personal injury claims; witnesses confirmed intent to exclude such claims.

Why it matters: proponents said securitization would lower the utility’s cost of capital for wildfire-hardening projects, protecting ratepayers from higher financing costs tied to a weakened credit rating; opponents and some legislators warned a liability cap and securitization could shift costs or reduce accountability if not carefully drafted.

Hawaiian Electric’s representative, Jason Ben, testified the company supports the bill with amendments, saying the measure helps protect customers from increased cost of capital tied to unlimited wildfire liability and would complement the company’s commitment to pay a $2,000,000,000 share of the Maui wildfire settlement with no contribution from customers. Henry Weisman, an attorney representing Hawaiian Electric, told members the bill’s defined term “qualifying damages” would apply only to property damage so personal-injury and wrongful-death claims would not be subject to the aggregate cap.

Rep. Shimizu and other members pressed for specific examples of how the cap would operate relative to damages from a major event (the Maui fires were discussed), and witnesses offered to follow up with calculations. The Public Utilities Commission and consumer-advocacy witnesses recommended technical clarifications, including tightening the definition of a wildfire mitigation plan and requiring study language and a working group for a potential wildfire recovery fund; the committee adopted several of those recommendations.

Committee direction and outcomes: the committee adopted the chair’s package of amendments that (1) make the $500 million limit applicable to HEI (holding company) rather than to each subsidiary; (2) exclude personal-injury and wrongful-death claims from the aggregate damages cap; (3) narrow securitization to electric utilities and exempt it from HRS 269-17; (4) require HECO to seek federal funding in good faith to offset costs; and (5) add language creating a study and working group on a potential wildfire recovery fund and clarifying the role of HI-EMA in declaring a catastrophic wildfire. The committee recorded a vote adopting the chair’s recommendation; a small number of legislators registered no votes or reservations in the JHA roll call.

Costs and financing: witnesses described Hawaiian Electric’s ongoing wildfire-hardening program as roughly $130 million per year over a roughly three-year plan; the utility reported it had already set aside $550 million of equity toward the settlement payments and was pursuing asset sales and other financing steps. Testimony also noted securitization’s finance cost would typically be lower than the utility’s unsecured cost of borrowing but that excessive use of securitization could be “earnings negative” and affect future financing capacity; the commission offered a possible compromise allowing securitization for the debt portion of projects while preserving equity financing capacity.

What remains: members asked witnesses to supply follow-up calculations showing how various cap formulas would have applied to the Maui wildfires; the committee asked staff to reflect the agreement (exclusion of personal-injury/wrongful-death claims and HEI application of the $500M) in the committee report and final draft amendments.