By Arunima Kumar and Arshreet Singh
(Reuters) -Hawaiian Electric Industries shares rose more than 10% on Friday, recovering some of their recent sharp losses after the utility said it is not looking to restructure but that it is seeking expert advice amid questions over its role in the Maui wildfires.
The company did not clearly outline the purpose for which it was seeking expert advice.
“Like any company in this situation would do, and as we do in the normal course of business, we are seeking advice from various experts,” it said in a filing. Hawaiian Electric did not respond to a request for more details.
The utility’s stock remains down about 60% for the week and has lost more than half of its value since the Aug. 8 wildfires that destroyed the coastal Maui town of Lahaina and killed at least 110 people.
The cause of the fires has not yet been determined, but the Honolulu-based company, Hawaii’s largest utility, has been blamed for them in class-action lawsuits. These claim the utility failed to shut off power lines despite warnings that high winds might blow those lines down and spark wildfires.
Also, ratings agency Moody’s Investors Service earlier Friday downgraded the utility’s credit rating to junk status, the second such cut this week after S&P Global Ratings, as investors worried over any potential wildfire-related financial and legal challenges.
The company said in its filing that shutting off power was not part of its high-wind management protocol.
“Preemptive, short-notice power shutoffs have to be coordinated with first responders, and in Lahaina, electricity powers some of the pumps that provide the water needed for firefighting,” it said.
Wells Fargo analyst Jonathan Reeder said most North American utilities do not have a formal Public Safety Power Shutoff program which outlines if and when such a drastic measure should be taken.
“Shutting off power is not an easy decision for a utility to make as there are widespread ramifications to safety when doing so,” he said.
Analysts have said Hawaiian’s situation is reminiscent of that of PG&E Corp and wildfires in California. PG&E filed for bankruptcy protection in 2019, and subsequently restructured, citing potential liabilities exceeding $30 billion stemming from California wildfires that were blamed on its equipment.
Hawaiian Electric said in the filing that unlike in California, there was no precedent in Hawaii of applying an “inverse condemnation” to a private party like an investor-owned utility.
An “inverse condemnation” exposes California utilities to liabilities from wildfires regardless of their negligence, as long as their equipment is involved.
As of Thursday, about 1,900 customers in West Maui remained without electricity, Hawaiian said. It did not include around 2,600 homes and businesses that were destroyed, which represent less than 1% of its customers.
(Reporting by Arshreet Singh, Arunima Kumar and Shreyashi Sanyal in Bengaluru; additional reporting by Caroline Valetkevitch in New York; Editing by Arun Koyyur and Josie Kao)
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