Hawaiian Electric stock plunges 40% after lawsuit alleges it failed
After a class action lawsuit filed over the weekend asserted that Maui’s devastating wildfires were caused by energized power lines knocked down by strong winds, Hawaiian Electric’s stock tumbled to a 13-year low Monday morning.
Approximately 95% of the residents of the state are served by the utility.
According to the lawsuit, Hawaiian Electric Industries did not deenergize its power lines during the Red Flag Warning and High Wind Watch conditions for Maui before the Lahaina Fire started, despite knowing that these conditions could spark a fire.
Despite knowing some poles and lines had fallen and had come into contact with vegetation or the ground, the company and subsidiaries did not disconnect them, the suit alleges.
Wildfires are still being investigated to determine what started them.
“Our policy has always been not to comment on pending litigation,” Hawaiian Electric vice president Jim Kelly said via email Sunday.
Our immediate focus is on supporting emergency response efforts on Maui and restoring power as quickly as possible. We will work with the state and county as they conduct their review of the fire at this early stage,” Kelly said.
In addition, Hawaiian Electric does not have a formal shut-off program, so precautionary shut-offs must be arranged with first responders. According to him, electricity is used to power the pumps that provide firefighting water.
Since the August 8 wildfire broke out, Hawaiian Electric’s stock has fallen about 47%, making it the deadliest US fire in more than a century and the fifth deadliest in US history. Hawaii Gov. Josh Green estimates the losses will approach $6 billion, based on preliminary reports from CoreLogic of $1.3 billion in residential property damages.
In the wake of last week’s deadly blazes, Hawaii’s attorney general has launched a formal review of the state’s emergency response. There have been some accusations of a lack of safety measures being implemented by the utility company by government officials and residents.
As the fires raged last week, the National Weather Service in Honolulu warned at least four times in a series of tweets that dry conditions and strong winds posed a serious fire threat. Electrical systems are one of the most common causes of wildfires, according to the Western Fire Chiefs Association.
Even so, Hawaiian Electric (HE) did not impose a public safety power shutoff, a temporary pause of service to certain areas due to an increased fire risk. According to weather conditions, utility companies usually shut off the power.
California’s utility companies have used this preparedness measure to fight wildfires for years, and, when they failed to execute these shutoffs, they have been forced to pay billions of dollars in damages.
In 2019, Pacific Gas and Electric (PG&E) agreed to several settlements after a state government investigation determined that its electrical equipment caused the 2018 Camp Fire. One of these settlements was worth $11 billion, while another was worth $1 billion to local governments that were affected by the flood.