The Journal. - Hawaiian Electric Knew of Wildfire Threat, but Waited Years to Act

Episode Date: August 22, 2023

In 2019, Hawaiian Electric concluded that it needed to do more to prevent equipment failures that could spark wildfires. In the wake of the Maui fires, the deadliest in the United States in more than a century, WSJ’s Katherine Blunt reports on why the company completed little such work.  Further Listening: - ‘Everything Is Gone’ — One Resident on the Maui Wildfires  Further Reading: - Hawaiian Electric Knew of Wildfire Threat, but Waited Years to Act  - Hawaii Officials Were Warned Years Ago That Maui’s Lahaina Faced High Wildfire Risk  - Officials Search for Remains of Maui Victims—and Answers for How the Wildfire Turned So Deadly  Learn more about your ad choices. Visit megaphone.fm/adchoices

Wildfires are becoming more frequent and more intense. Fire seasons are hotter, drier, and longer. This year alone, we've seen fires in Greece, Italy, Canada, California, and Hawaii. Although climate change is making wildfires worse, what sets them off remains the same. Wildfires have a number of causes. I mean, they can occur naturally as a result of lightning strikes. They can occur when sparks from a campfire catch wind. They can occur as a result of automobile accidents.

They can occur as a result of arson. And they can occur when power lines fail. to arson, and they can occur when power lines fail. Our colleague Catherine Blunt has been reporting on the possible sources of the wildfires on Maui. The causes are still unknown, but mounting evidence suggests the role of downed power lines. Potential new signs about what may have sparked Maui's devastating wildfires. There were reportedly serious faults on the power lines in the area where the fire started. Downed power lines sparking fires as extreme winds came through.

Maui's power grid is run by Hawaiian Electric, the state's main power company. For years, the utility said it would update its power lines to prevent sparks that could cause fires, but it didn't make a lot of progress. Now, the utility is facing increasing scrutiny and lawsuits over its lack of action ahead of the fires. Wine Electric said it would do more. However, the company moved fairly slowly. And, you know, it's not necessarily an outlier in that way. And there's an unfortunate reality that it often takes a disaster in order to really kick a company into high gear.

Welcome to The Journal, our show about money, business and power. I'm Jessica Mendoza. It's Tuesday, August 22nd. It's Tuesday, August 22nd. Coming up on the show, why Hawaiian Electric wasn't more prepared for the wildfires on Maui. Your teen requested a ride, but this time, not from you. It's through their Uber Teen account. It's an Uber account that allows your teen to request a ride under your supervision with live trip tracking and highly rated drivers. Add your teen to your Uber account today.

At least 114 people have died in the Lahaina fire on Maui's western coast, and that number is expected to rise. The fire is the deadliest the U.S. has seen in a century. But until two weeks ago, that grim distinction belonged to the Camp Fire, which burned through Northern California in 2018. Catherine covered that fire as well. We do not know for sure that power lines ignited the fire in Maui. However, if it's determined that were the case, there are significant parallels with what happened in California. And, you know, it certainly raises a lot of questions about how the utility operated the system, if that were to be the case. The California utility company Pacific Gas and

Electric, or PG&E, operated equipment that was later found to have caused the campfire. There was a transmission line running through the Sierra foothills, the very remote area, and a small hook that was holding up a high voltage wire broke almost exactly in half. Sparks settled on the dry brush below, and within, you know, a matter of minutes, the fire was almost completely out of control. It took just a matter of hours before it spread very significantly, destroyed the town of Paradise and other surrounding communities. Eighty-four people died as a direct result of the fire. An 85th person committed suicide as the flames approached. And it was just a devastating tragedy.

This is an unprecedented event, as we know. And if you've been up there, you also know the magnitude of the scene that we're dealing with. And I want to recover as many remains as we possibly can as soon as we possibly can. The power company, PG&E, was held liable for damages from the fire due in part to its aging equipment. It was determined that PG&E hadn't done nearly enough to maintain its transmission system safely. It wasn't doing enough to detect that risk. They can also do more to clear power lines of vegetation, trim or cut down trees, and reduce the likelihood that a branch could come into contact with live wire.

PG&E and other utilities throughout the West have also been sort of experimenting with power line settings that make it so that if something does come into contact with the live wire, the power line shuts off almost immediately, significantly reducing the risk of sparks. After a year-long investigation, PG&E was held criminally responsible for the campfire. Prosecutors were successful in charging the company with reckless negligence, and the company pleaded guilty to 84 counts of involuntary manslaughter for each of the deaths. It wasn't just the campfire. According to state investigators, PG&E's equipment sparked a series of deadly wildfires in 2017 and 2018. More than 100 people died. The number of lawsuits against PG&E started to pile up. And by 2019, the company was in bad financial shape. There were significant financial implications for PG&E. In California, utilities are liable for damages resulting from fires ignited by their equipment. Whether they maintain the equipment well or not, it's a strict liability construct.

not. It's a strict liability construct. So in this case, a combination of the campfire in 2018 and a series of deadly and destructive wildfires in 2017, the company owed an estimated $30 billion and it sought bankruptcy protection to sort through that. PG&E is still the main utility provider in Northern California, and the company has said that it's committed to change. As all of this was unfolding, other utilities were watching, including Hawaiian Electric. Executives at the firm saw what happened to PG&E as a wake-up call. They decided they needed to do something to reduce the risk of wildfires in Hawaii.

In 2019, the company put out an announcement that it was trying to do more to assess fire risk within its service territory. There had been a steady increase in wildfire risk on the islands for some time. And, you know, scientists say that's, you know, the risk has been exacerbated by climate change. What did it say was needed to reduce the risk of wildfires in Hawaii? What did it say was needed to reduce the risk of wildfires in Hawaii? In that announcement, the company said it would fly drones to get a better assessment of where the riskiest areas were and would just simply do more to strengthen the system, reduce the risk of infrastructure failure, do more to keep trees away from power lines. That's a real risk. It's kind of very basic and straightforward means of reducing the likelihood that power line

failure could result in catastrophic wildfire. And from there, it says it hired a consultant to help provide some recommendations and guidance into how to put forth a comprehensive plan to reduce wildfire risk. The company was slow to act. It needed funds to get the ball rolling, and that would mean raising rates, which would need to be reviewed by the Hawaii Public Utilities Commission. Hawaiian Electric didn't ask for that review until last year, and the process can take years. By the time the Maui fires hit, the commission still hadn't finished its assessment. So as of two weeks ago, how much had Hawaiian Electric done to prevent wildfires?

The company had done relatively little to reduce fire risk as it was seeking approval from the commission. A spokesperson for Hawaiian Electric said the company reduces wildfire risk through its routine utility work, which includes trimming or removing trees and upgrading, replacing, and inspecting equipment. But the company needed to balance those efforts against another major priority, a big shift to renewable energy. That's after the break. We'll see you next time. them. Ooh, must be mating season. And hiking with them. Is that a squirrel? Bear! Run! Collect more moments with more ways to earn. Airmile. Embrace the summer vibes with Summer's Be Hard Cider. Bursting with lovely aromas of apple, this light-bodied, fruity cider offers a crisp, clean finish.

Perfect for sunny days and warm nights. Enjoy it well-chilled or over ice. That's refreshing. That's Summer's Beat. Must be legal drinking age. Please drink responsibly. Carlsberg Canada Inc., Waterloo, Ontario. As the threat of wildfires continued to grow in Hawaii, Hawaiian Electric was slow to act on safety.

According to regulatory filings, between 2019 and 2022, Hawaiian Electric invested less than $245,000 on projects to prevent wildfires on Maui. And that's partly because wildfire mitigation wasn't the company's only focus. In talking to people who are close to the company for the last 10 years or so, they describe a utility that was very focused on renewable energy targets. Hawaii, like California, has had ambitious goals in place to green the system by replacing conventional power plants with wind and solar power. And that's, of course, part of an effort to reduce carbon emissions and address underlying risks of climate change. And that was in terms of resources and kind of overall focus that was, you know, very important to the company,

very important to the state of Hawaii, and took a lot of time and planning. very important to the state of Hawaii and took a lot of time in planning. In 2015, the state mandated a 100% shift to power from renewable sources by 2045. Here's Governor Josh Green. We tried to lead on energy and climate. We were the first state to mandate 100% renewable energy for electricity. So it's, again, an opportunity as a small state with technically a small footprint, but we do punch above our weight a little bit because of our position.

Based on your reporting, did that focus on renewable energy come at the expense of maintaining existing infrastructure and wildfire mitigation? You know, it's hard to say if that focus came at the expense of system safety, right? I mean, the simple fact is that most of the company's time and resources seem to be dedicated to facilitating the shift to cleaner power. But that's not to say that you can't do both at once, that it can't be focused on clean power generation as well as system safety. I mean, utilities, the mandate is to do both at once. Catherine says that whatever Hawaiian Electric eventually had planned for wildfire prevention, their power grid experienced multiple problems on the night of August 7th.

A company with sensors on the power grid detected a lot of disruptions, faults, so to speak, or just issues with the flow of electrical current. Grid faults can result, like, of any number of causes. That's not direct evidence that power lines played a role in wildfire ignition, but it's possible. The next day, the fire was first reported. It moved west very quickly. And sometime that day, there was video showing downed power lines igniting dry grass. And how did Hawaiian Electric first respond to the wildfires?

By working with first responders and others to try to make sure that whatever they were doing, they would be safe, right? That's like very typical response on the part of the utility. It also, there was a number of very significant power outages as a result of issues with equipment. The company was very focused on trying to restore power where it could. Was there anything else they could have done in that moment or during that time period to stop these fires or to slow them down? There was criticism that the company didn't have a plan in place to proactively shut off power ahead of the wildfire.

Utilities in California have been doing this for some time. ahead of the wildfire. Utilities in California have been doing this for some time. It's, you know, when they detect risky conditions, they proactively shut off portions of the power grid so that if there is equipment failure, it doesn't ignite. And whether or not this equipment played any role in the fire, we have to wait and see. Hawaiian Electric said it would investigate any part its infrastructure may have played. It also said it would cooperate with the State Attorney General's office, which has launched a separate probe into the fire. Hawaiian Electric is already facing serious financial consequences. Last week, the company's stock plunged 49 percent.

What's on the line here for Hawaiian Electric? Is the future of the utility company in jeopardy? Well, the utility will continue to exist no matter what. I mean, it's a critical service provider. And even if Hawaiian Electric itself, like as it's structured currently owned by investors, can't continue, you would see intervention by the state or some other entity to ensure that the company can keep operating the system in some form or fashion. If its power lines were determined to have caused this fire or were implicated in this fire, it's going to have to be determined that the company was negligent in the way that it operated the system,

I think, in order for it to bear financial liability for some or all of the damages. In the meantime, survivors of the fire are suing. They're accusing Hawaiian Electric of negligence and having known there was a high risk of wildfire. They point to the lack of a system that would have shut off power after detecting risky conditions. The investigation on the precise cause of the wildfires is expected to take months. Could Hawaiian Electric have acted sooner? That's a difficult question to answer. Could the company have moved faster? Probably. The company could have moved faster.

I think that's always the question. At what point should a company begin to move to address risks that haven't been historically very acute? I think that in hindsight, it's easy to say these companies should move faster or have done more or have had more foresight. That might be true in part, but these things are not easy to address, right? The utility industry tends to be fairly slow moving and the regulatory process is never fast. What's the lesson here, if any, for utility companies watching what's unfolding, you know, first with PG&E and now also with Hawaiian Electric? Well, certainly I think that climate change is presenting a number of risks right now, right?

And in many cases throughout the country, both regulators and utility companies have been working to address this by shifting to cleaner energy to reduce carbon emissions long term. this by shifting to cleaner energy to reduce carbon emissions long term. Meanwhile, the changing climate is creating new risks that need to be addressed operationally. It just really underscores the need to make sure that you are operating a dangerous system in the safest way possible. I think that there's some unfortunate irony here, right? I mean, utility companies for a long time have been focused on long-term climate change mitigation with the shift to renewables. Meanwhile, climate change is creating near-term, really clear and present risk that also needs to be addressed fairly quickly. Thank you.