Senate committee moves to study wildfire recovery fund, delays liability cap decision

The Senate Committee on Commerce and Consumer Protection on March 20 amended HB 982 HD3 — originally proposing a wildfire recovery fund and liability cap for utilities — to remove the bill’s substantive funding and cap language and direct a study and working group to examine how a fund and any liability limits should be structured.

Hawaiian Electric (HECO) testified in support of measures that would address “unbounded wildfire liability” and urged lawmakers to consider a wildfire recovery fund coupled with a liability limit as a way to restore the utility’s credit standing and reduce financing costs. HECO told the committee it has committed to pay its roughly $2 billion share of a global settlement and that unlimited future wildfire liability raises the utility’s cost of capital, increasing costs for customers. “We continue to believe that the existence of a wildfire recovery fund coupled with a limitation on liability provides significant benefits and represents the best balance of interests,” HECO’s witness said.

Other parties testified across a wide range of positions. The Hawaii Association for Justice opposed the bill’s liability caps as currently drafted, arguing the caps were unusually aggressive and could prevent victims from receiving funds sufficient to rebuild; the association urged amendments to better reflect costs of repair and replacement. The Division of Consumer Advocacy, the Public Utilities Commission and insurer and energy-sector witnesses provided comments on versions of the bill and on ongoing PUC dockets concerning wildfire mitigation plans.

Committee members pressed HECO and the PUC on several technical points, including the number of other states that have enacted similar instruments (witnesses cited California and Utah as states with measures in place), the threshold that would trigger the fund (the draft had used a 500-structure destruction threshold), and whether the current insurance market provides coverage that would make a fund unnecessary. HECO testified that its existing catastrophe coverage — about $150 million — is well below the exposure it could face and that market premiums have recently been very expensive (testimony referenced premium quotes of roughly $350,000 per $1 million of coverage in recent markets).

PUC staff said the commission has opened a docket on wildfire mitigation plans and is accepting statements of position and discovery responses, with procedural deadlines stretching into August 2025. Committee members discussed the practical effect of setting a high catastrophe threshold (for example 500 structures) and asked whether more moderate thresholds or different cap structures might better protect ratepayers and victims in smaller but still severe events.

After deliberation, the committee adopted an amendment to delete the bill’s contents and insert a study and working group proposed by HECO; committee leaders said the study approach would allow stakeholders and the legislature to examine precedent from other states, insurance-market conditions, mitigation plans already financed, and the mechanics of a securitized fund or other instruments before setting durable policy. The committee’s recorded votes at the decision-making moment show the chair and vice chair voting aye, and other members recorded in favor; the committee report adopted the substitute directing the study and working group.

Committee leaders signaled that the legislature’s more immediate response to HECO’s financial stress would be a separate general-fund appropriation (discussed elsewhere in the hearing) to address litigation overhang tied to the company’s settlement obligations, while the study would focus on long-term instruments to limit future exposure.

The committee encouraged continued PUC work on wildfire mitigation plans and flagged the need to review the PUC’s forthcoming filings and the scope of planned mitigation expenditures.