Confusion remains around Senate Bill 2922, a proposed measure that would allow Hawaiian Electric to securitize ratepayer funds for wildfire mitigation. It is critical to clarify what this bill proposed to do and why I recommended that it be deferred until next year.

Securitization is a big deal and will affect generations of Hawaii residents. We know that HECO faces potentially massive liability from lawsuits for its role in the Maui wildfires. HECO’s diminished credit rating since the fires has made it difficult to obtain regular financing. We also know that HECO needs to perform wildfire mitigation to prevent future disasters.

SB 2922 proposed that HECO recover the costs of implementing a mitigation plan through securitization. This is seen as a reliable way to pay for mitigation now, since the lawsuits will likely take years to resolve.

Securitization is a financing mechanism that would enable HECO to charge a fee on every ratepayer’s bill for up to 30 years. HECO would then borrow money by securing that guaranteed revenue at low interest rates.

Things get complica- ted when determining how the rate is charged to consumers. While HECO proposed that the fee would be capped at 5% of an average residential ratepayer’s bill, there were no explanations of how rates would be applied to businesses who would pass those fees on to consumers. This is important because more than 60% of HECO’s revenue comes from industrial and commercial users, not homeowners.

We also know that HECO has other options. Reports surfaced last week about the potential sale of Hawaiian Electric Industries Inc. subsidiary American Savings Bank. In August, HECO was award- ed $95 million by the U.S. Department of Energy for grid hardening. And they are currently asking for Public Utilities Commission (PUC) authority to raise up to $250 million more through a different funding mechanism called an accounts receivable facility.

Typically, consumers see an itemized list of expenses before they agree to pay for work. The same should hold true for HECO and its plan. However, HECO does not have a wildfire mitigation plan — the PUC ordered the utility to create one in November, and it is still being developed. It isn’t reasonable to commit consumers to 30 years of payments for an interim plan.

For example, how many miles of electrical wire will be undergrounded? In what areas are pole replacements being considered? What is the estimated cost difference? There was no estimated cost provided for HECO’s plan. Throughout the session, legislators repeatedly asked the company to provide financial details for its proposal but were rebuffed.

Finally, SB 2922 did not guarantee that local workers or retirees would be protected. Nor did it provide any assurances that HECO would remain locally owned and operated. The bill did not guarantee that HECO would avoid bankruptcy; only a resolution of the litigation can confirm that HECO will remain solvent.

We all want to ensure a healthy, sustainable and accountable electrical utility — but it will take thoughtful planning to get there. With more information, a reasonable analysis can be conducted in the consumer’s best interest. These include a finalized mitigation plan with projected costs to fully harden the grid, an itemized breakdown of those costs and time frames for completion.

We can and need to have these difficult conversations, but they will take time. It is simply premature to commit consumers to decades of payments without more information. Our shared duty to ratepayers — to the people of Hawaii — demands it.