A clash between two power players — Hawaiian Electric Co. (HECO) and the Hawaii Regional Council of Carpenters — is heading to a showdown at the state Legislature. Their conflict, though, is a mere sideshow to very significant decisions that will be made over the next two weeks that would affect what Hawaii electricity users pay.
All eyes are on Senate Bill 897, which aims to establish a liability damages cap for future wildfires; authorize “securitization” for electric utilities, a means to secure low-cost financing for disaster mitigations via a new fee on ratepayers; and create a working group to explore a new wildfire recovery fund.
The most worthwhile component of SB 897 is securitization — an important tool for HECO to access low-interest 30-year bonds, financed by a new line-item charge on customers’ bills. Of course, no ratepayer wants to pay more — adding $4 monthly is being discussed — but such financing would enable HECO’s crucial disaster-prevention improvements, as well as bolster the utility’s bad credit rating, which tanked after the devastating 2023 Lahaina wildfires. Like it or not, much of HECO’s fiscal health is intertwined with this state’s economic vitality. Giving HECO the ability to tap cheaper capital will be cheaper for ratepayers in the long run.
Still, it’s good that SB 897 is mindful to protect ratepayers, limiting securitization to $500 million. Also good is the state Public Utilities Commission’s suggestion that electric utilities’ securitization costs be limited to mitigations and infrastructure investments that reduce wildfire risk.
And while he also supports securitization for HECO as a useful “bridge,” state Consumer Advocate Michael Angelo had strong words against overreach: “Put simply, customers did not start the fire that degraded Hawaiian Electric’s credit rating, are not responsible for ongoing wildfire risk, and should therefore not bear the financial burden of funding Hawaiian Electric’s costs to obtain additional private insurance coverage or contributing to a wildfire fund intended to serve as supplemental insurance to address its wildfire risk.”
That directly criticized what many saw as too-sweet a deal for HECO under another legislative bill: creation of a $1 billion wildfire recovery fund — funded by a new fee on ratepayers, while HECO itself would put in just $5 million for administration, keeping its shareholders and highly paid top execs relatively unburdened. The Governor’s Office was among those who, rightly, called for HECO to “significantly” increase its contribution and to decrease the impact on ratepayers. That bill has been shelved.
As it stands, SB 897 would create a working group to vet the idea of a wildfire recovery fund, then report back to next year’s Legislature. Also in need of more vetting is a proposed $1 billion limit on future liability for wildfire damages, which must strike a balance between the utility’s proactive diligence and accountability.
As for the sideshow: Pushback against HECO has been stunningly forceful from the carpenters’ union, which launched a hardball campaign weeks ago opposing any “bailout” for HECO and emphasizing the already high costs of electricity here. The union and its political arm, Pacific Resource Partnership, are known heavy hitters in Hawaii politics. Even so, their vehemence against the HECO-related bills has spilled bad blood among the usually-united trades brethren — and revealed unsavory tactics.
Turns out the carpenters union launched its campaign after failing to nail an exclusive 20-year project labor agreement (PLA) with HECO for its Integrated Grid Plan, which includes pathways for getting to 100% renewable energy by 2045. The PLA would have cut out the IBEW, which has a longstanding labor pact with HECO, said Leroy Chincio, of the International Brotherhood of Electrical Workers Local 1260.
“They want an exclusive project labor agreement or else they would hold the bill as hostage,” Chincio said. “If the carpenters union got what they wanted, it would cut out all of the other unions, too. Wow. They want it all.”
So, expect heavy debate on SB 897 in these last two legislative weeks. It’s reasonable for HECO to get help via lower-cost securitization — but financial burdens must be fairly borne, not just on the backs of ratepayers while HECO insiders go relatively unscathed. Political noise aside, energy consumers must be kept in sight, not left in the dark.
