(Reuters) — Hawaiian Electric Industries Inc. is reportedly part of a group of companies that have tentatively agreed to pay over $4 billion to settle numerous lawsuits related to the devastating wildfires that ravaged Maui last year, sources familiar with the agreement disclosed.
The proposed settlement, which is still pending final approval, aims to resolve claims on behalf of thousands of homeowners and businesses against Hawaiian Electric, the utility provider on the island, the insiders said on condition of anonymity.
Other parties involved in the tentative agreement include a subsidiary of Charter Communications, as well as state and local governments. However, the deal is not yet finalized and could potentially fall through.
Shares of Hawaiian Electric surged by as much as 43% in New York on Friday, reaching their highest point since August 15, 2023.
Representatives for Hawaiian Electric and Charter Communications declined to comment on the reported settlement, while the Hawaii Attorney General’s office and the County of Maui also refrained from providing details, citing confidentiality agreements.
The proposed settlement amount falls below the estimated capital cost of roughly $5.5 billion attributed to the wildfires, according to a damage assessment released last year. The fires destroyed or damaged a total of 2,207 structures, with the majority being residential properties.
The exact allocation of the $4 billion liability among the companies and governments involved remains unclear, the sources noted. Hawaiian Electric is expected to bear around $1.5 billion of the settlement, with the shares of other entities still being determined. The proposed settlement is anticipated to be distributed over a four-year period, according to some informants.
It is also uncertain how much compensation homeowners and business owners will receive from the settlement if it is finalized.
Insurers are reportedly seeking nearly $2 billion from the settlement fund as reimbursement for claims already paid out. On the other hand, lawyers representing homeowners and business owners have proposed an amount exceeding $600 million.
The tentative agreement was reportedly reached earlier this month following court-mandated mediation sessions, although the judge has yet to give formal approval.
Junk Credit Ratings
Hawaiian Electric faced criticism for not shutting off power in August 2023 despite warnings of dry, strong winds that could lead to dangerous fire conditions. The incident had a detrimental impact on the company’s financial prospects, resulting in a significant drop in its market value. Consequently, its credit ratings were downgraded to junk status, severely limiting its ability to raise funds.
The utility acknowledged that intense winds caused power lines to fall and power poles to break, sparking a small fire near Lahaina on the morning of August 8. Although firefighters reportedly extinguished the initial blaze, a fire rekindled later in the day after the power was cut off.
Officials in Maui County are set to discuss the proposed settlement at a hearing scheduled for Friday. While the exact amount of the agreement has not been disclosed, local news reports indicate that the county is open to reaching a negotiated settlement. The county had sued the utility, alleging inadequate preparation for wildfires, to which Hawaiian Electric responded with a countersuit.
The lawsuits were consolidated before Judge Peter Cahill for pre-trial proceedings, with no trial dates set as of now.
The case is IN RE: Maui Fire Cases, 2CSP-23-0000057, Circuit Court of the Second Circuit, State of Hawaii (Wailuku)
–With additional reporting by Bre Bradham and Farah Elbahrawy.
(Updates with share price in fourth paragraph.)
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