UPDATE: Hawaiian Electric Industries Inc. is set to invest nearly $2 billion over the next three years to significantly enhance wildfire safety and power generation capabilities. This urgent plan was revealed during a conference call with analysts on September 30, 2023, following the utility’s third consecutive quarterly profit this year.
The company, which serves Hawaii Island, Oahu, Maui, Molokai, and Lanai, aims to allocate between $1.75 billion and $2.35 billion from 2026 through 2028. This funding will focus on capital improvement projects, primarily financed through retained earnings and newly issued debt.
Hawaiian Electric plans to ramp up its annual spending between $550 million and $850 million, a significant increase from the approximately $400 million spent in 2023. This funding strategy includes a newly boosted credit facility of $600 million, up from $375 million, and $500 million raised through debt issued to institutional investors in September.
This critical investment comes on the heels of the devastating Maui wildfire on August 8, 2023, which resulted in a tragic loss of 102 lives and extensive property destruction in Lahaina. The company has agreed to a $2 billion contribution toward a $4 billion settlement for victims, underscoring the urgent need for enhanced safety measures.
“Enhanced liquidity from our debt issuance will support our investments in generation, safety, reliability, and resilience across the islands,” stated Scott Seu, HEI president and CEO. The company reported a profit of $31 million for the third quarter, contrasting sharply with a $104 million loss during the same period last year, primarily due to wildfire-related litigation claims.
Hawaiian Electric has set aside $479 million for the first installment of the wildfire settlement, which is due in early 2026. The company plans to finance future payments using a mix of debt and equity.
In addition to the financial strategies, Hawaiian Electric is proactively implementing safety measures to reduce the risk of further wildfires. These include a Public Safety Power Shutoff program set to begin in July 2024, alongside extensive equipment upgrades. Since the start of 2024, 3,628 wood poles have been replaced or upgraded, 36 miles of copper lines have been swapped out for more resilient aluminum, and 10,361 fuses have been upgraded.
“We are committed to ensuring the safety of our communities,” Seu emphasized, highlighting the installation of 101 weather stations and the operation of 135 AI-assisted video cameras to detect fires in real-time.
Hawaiian Electric’s customers may face higher rates to finance these improvements, pending approval from the state Public Utilities Commission. Meanwhile, the company’s stock closed at $11.20 on October 2, 2023, a stark drop from $37.36 just before the Maui wildfire.
As Hawaiian Electric moves forward, all eyes will be on the effectiveness of these investments and the ongoing efforts to enhance safety and reliability in the wake of recent disasters. Stay tuned for more updates as the situation develops.
