Hawaiian Electric Industries Inc. is among the companies that have tentatively agreed to pay more than $4 billion to resolve hundreds of lawsuits over the wildfires that ripped through Maui last year, according to people familiar with the deal.
The proposed accord, which still awaits final approval, would settle suits on behalf of thousands of homeowners and businesses against Hawaiian Electric, which operates the utility on the island, said the people, who declined to be identified because they aren't authorized to speak publicly about the agreement.
Other defendants covered by the tentative settlement include a unit of cable provider Charter Communications, along with state and local governments. The deal, which has not yet been finalized, could still fall apart.
Hawaiian Electric shares jumped 22 per cent in postmarket trading as of 5:11 p.m. New York time.
Spokespeople for Hawaiian Electric and Charter Communications declined to comment Thursday on the tentative settlement. A spokesperson for the Hawaii Attorney General also declined to comment, citing a confidentiality agreement. The County of Maui also declined to comment.
The proposed amount is below the estimated capital cost of approximately $5.5 billion caused by the fires, according to a damage assessment released last year. The blazes damaged or destroyed 2,207 structures "- the majority of them residential.
It's still unclear how the $4 billion in liability will be divided among the companies and governments, the people said. They noted Hawaiian Electric is on the hook for about $1.5 billion of the settlement, but other companies' shares are still being finalized. The proposed settlement will be paid out over four years, according to some of the people.
Insurance claims
It also remains unknown how much homeowners or business owners will receive in financial recoveries from the proposed settlement.
Insurers are demanding almost $2 billion of the settlement fund as reimbursement for claims they've already paid out, the people said. Lawyers for homeowners and business owners have countered with an offer of more than $600 million, they added.
The tentative deal was reached earlier this month through court-ordered mediation sessions, the people said. The judge has not yet signed off on the proposal.
Junk credit ratings
Hawaiian Electric has been criticized for not turning off power in August 2023 despite warnings that dry, gale-force winds would create critical fire conditions. The disaster cast a shadow over the company's financial outlook, causing it to lose more than half of its market value since the blaze. Its credit ratings have been cut to junk, severely limiting the company's ability to raise capital.
The utility has acknowledged strong winds downed electric power lines and snapped power poles, causing a small blaze near the historic town of Lahaina the morning of August 8. However, utility executives said firefighters extinguished that blaze and left the site, where a fire later flared up in the afternoon when it had turned off the power.
Maui County officials are scheduled to discuss the accord at a hearing Friday. They have declined to reveal the amount of the proposed deal, but said in local TV news reports that they were open to "a negotiated settlement." The county sued the utility, claiming it failed to properly prepare equipment for the threat of wildfires. Hawaiian Electric filed a countersuit blaming the county.
The suits had been consolidated before Judge Peter Cahill for pre-trial information exchanges. None of the cases have been set for trial.
The case is IN RE: Maui Fire Cases, No. 2CSP-23-0000057, Circuit Court of the Second Circuit, State of Hawaii (Wailuku)
