Hawaiian Electric stock falls after Maui County sues for damages

Maui County on Thursday sued Hawaiian Electric for damages over the deadly wildfires which have claimed more than100 lives and resulted in billions of dollars in estimated property losses.

Hawaiian Electric’s stock fell 6% in prolonged trading on news of the lawsuit. The electrical utility said it’s going to suspend its quarterly dividend starting within the third quarter to liberate money to assist rebuild and restore power within the wake of the fires.

Maui County’s attorneys said Hawaiian Electric inexcusably left its powerlines energized despite a warning from the National Weather Service that prime winds from Hurricane Dora and drought conditions created a high fire risk.

The wildfires reduced the historic town of Lahaina to ruins within the deadliest blazes within the U.S. in greater than a century and the worst disaster in Hawaii state history. No less than 115 people have died and greater than 1,000 are still missing.

Hawaiian Electric issued a press release on the day the fires broke out that 30 utility poles had been knocked down in West Maui, the region where Lahaina is positioned.

“These powerlines foreseeably ignited the fast-moving, deadly, and destructive Lahaina Fire, which completely destroyed residences, businesses, churches, schools, and historic cultural sites,” the county’s attorneys said within the lawsuit.

Maui County said the death and destruction might have been avoided had Hawaiian Electric shut off power. The county cited initial estimates from the Federal Emergency Management Agency that it’s going to cost greater than $5 billion to rebuild Lahaina.

The grievance filed by Maui County is the newest in a string of lawsuits against Hawaiian Electric searching for damages for the catastrophic wildfires.

Fitch recently downgraded Hawaiian Electric’s credit standing to junk status, warning that the corporate faces an existential threat from greater than $3.8 billion in potential liability for the Maui wildfires. Pacific Gas & Electric in California filed for bankruptcy in 2019 when facing billions of dollars in liability for wildfires.

Moody’s estimates the Maui wildfires have caused as much as $6 billion in economic losses.

Maui County also said within the lawsuit that its 2020 hazard mitigation plan warned that western Maui was at a high risk of wildfires. Hawaiian Electric understood this risk and filed a $190 million request in 2022 with the state public utilities commission to bolster its power grid, the county said.

Despite this, Hawaiian Electric operated utility poles fabricated from wood that are way more liable to decay in Maui, the county said. Lots of the wood poles on Maui were severely damaged by advanced decay which contributed to their failure in the course of the high winds, the county alleged.

The county said that Hawaiian Electric also knew its overhead transmission lines didn’t use available technology to scale back the danger of fires.