While communities are still dealing with the aftermath of the Maui wildfires, the state Legislature is considering a measure to address property damage in the case of future catastrophic wildfires.
The measure would allow stakeholders to pay into a wildfire relief fund that would compensate property owners in the instance of another wildfire. That would include government entities like the state, large property owners with over 1,000 acres of land and share-holder utility companies such as Hawaiian Electric.
In return, property owners who decide to participate would give up their rights to sue the entities that pay into the fund.
Sen. Tim Richards, who introduced the measure, explained that it’s a way to reduce litigation in the future.
“The idea is a relatively rapid payout, not years and years and years later. And that's one of the things with litigation. It may be five to seven years before anybody collects anything,” Richards said.
“In my perspective, that is as damaging, if not more, to families and communities and economies.”
How it would work
Richards said the way it is now with open liability, the state, large landowners and utility companies will have a difficult time functioning and borrowing money to make needed improvements for wildfire mitigation.
The fund is voluntary for both homeowners and stakeholders. Claims for compensation would be processed in 90 days.
Property owners would be notified that they’ve been enrolled in the wildfire relief fund with each property tax assessment. They would then be able to notify the state that they want to opt out of the wildfire relief fund. However, those that live in moderate, high or extreme wildfire risk areas would need to show proof of insurance coverage.
The measure does not mandate that any parties, such as the state or Hawaiian Electric, need to pay into the fund. The measure just outlines the stakeholders that would be eligible to pay into it.
If Hawaiian Electric wanted to participate in the fund, it would need to submit a wildfire mitigation plan to the Public Utilities Commission, as well as a plan to minimize the financial burden on ratepayers.
The measure also mandates that if one of the participants caused the fire, or their actions contributed to the fire, they would have to then reimburse the fund.
Key provisions in the bill have been left blank
It’s not yet clear how much money is supposed to be in the fund and how much each party is supposed to contribute.
Michael Wara, a senior research scholar at the Stanford Woods Institute for the Environment, worked on the formation of a similar, but larger, wildfire relief fund in California.
“When we sized the wildfire fund, we went to the insurance industry,” Wara said.
“We had them run through a whole series of exercises about what the worst-case scenarios were in California and that helped to inform us about how big the wildfire fund needed to be to restore market confidence,” he said.
Proposed amounts for the fund
Hawaiian Electric has suggested that the fund be $1 billion. HECO also wrote in its testimony that it should contribute a third of that total amount — $333 million — and the state should kick in the other third. It said the rest should be split among the remaining contributors.
The Office of the Governor was wary about the proposed amounts.
“These figures were significant and raise some questions as to whether the state can continue not opposing the bill,” it wrote in its testimony on the bill.
“While the Office of the Governor remains open to the original purposes of creating such a fund, these details coming to light through the proposed amendments are quite concerning.”
HECO, in an emailed statement, said they proposed that amount as a starting point and that $1 billion would represent the scope of a wildfire that destroys 500 structures.
Wara explained that the state is facing a problem of scale. In California, there are three large utility companies that can pitch into their fund and a population of 39 million compared to HECO's 1.4 million population.
“That's a combination of three of the largest utilities in the United States and Hawaiian Electric, it's not that big,” Wara said.
“I mean they are on a different scale when it comes to the ability to afford these kinds of things, and particularly to afford them, given their current challenges," he said.
SB3344 is in conference where the chambers have two days left to come to an agreement on amendments to the measure.
