It is now widely expected that behemoth Hawaiian Electric Company (HECO) will be forced into bankruptcy by the recent Maui wildfires. Many visitors may not know that it supplies power to 95% of the state. The 5% not included is the island of Kauai, which is largely immune to the fallout, and we’ll tell you why in this article.
Oahu, Maui, Molokai, Lanai, and Big Island residents could see electrical costs soar, and so could visitors.
Hawaiian Electric owns the following electric utilities: Hawaiian Electric Company on Oahu, Hawaii Electric Light Company on the Big Island, and Maui Electric Company, which powers Maui, Lanai and Molokai.
“Hawaiian Electric may collapse after fires, forcing reckoning for utilities. One after another, utilities confront massive liabilities for wildfires. With the Maui fire, Hawaiian Electric faces potential insolvency.”
-The Washington Post
Hawaiian Electric bk would leave Kauai the lone wolf standing in power independence.
How this will impact power and related costs on the other Hawaiian Islands hasn’t been previously reported. But we can anticipate higher prices which will be felt by both visitors and residents alike.
An electric utility bankruptcy will increase the cost of service and could also harm the ability of Hawaii to continue its move forward in renewable energy. This has been seen in other recent bankruptcies elsewhere.
Big payouts associated with the Maui fire may also impair the ability of the utility company to make the necessary upgrades that could help prevent future fires. Undoubtedly, the cost of all this will come directly down to the customers, residents, and visitors across Hawaii, where electric rates are already the highest in the nation.
Electric rates impact Hawaii hotel and vacation rental costs and restaurants, too.
Higher electric rates for Hawaii hotels ultimately lead to increased operating costs, inevitably increasing nightly room rates. Restaurants will also face higher expenses with increased energy costs, resulting in higher menu prices.
Owner of Fairmont Kea Lani, Fairmont Orchid, and Ala Moana Hotel offers worst-case scenario.
“Energy typically accounts for about 8% of total costs, but that could rise as high as 25% in a worst-case scenario.”
-Sebastain Bazin, CEO of Accor.
Indeed, Hawaiian Electric customers on all islands (except Kauai) may face skyrocketing energy bills, which could have a ripple effect on the economy. While at hotels and vacation rentals in Hawaii, it can result in a decrease in the number of room nights sold and a reduction in revenue and profitability.
Impact on Hawaii electricity costs.
While it isn’t clear what impact a Hawaiian Electric insolvency will have on most of Hawaii, the island of Kauai has been insulated from the effects of fuel price fluctuation, which we’ll tell you about below. The State of Hawaii has had a long history of relying on oil as its primary source of electricity generation. For example, in 2021, more than 65% of Hawaii’s power came from oil, and 1/3 of that came from Russian sources. That was before the Ukraine situation, which resulted in the US banning all Russian gas and oil, driving prices even higher.
Hawaiian Electric: since 1891.
Hawaiian Electric Company’s long history dates back to October 13, 1891. It has now expanded to provide power to all of the Hawaiian Islands except Kauai.
Environmentally friendly Kauai boasts solar and Biofuel.
Kauai is the only Hawaii island not supplied by Hawaiian Electric Company. Instead, the consumer-owned Kauai Island Utility Cooperative (KIUC) manages that island’s electricity.
KIUC was formed in 2002 and is one of America’s newest electric cooperatives. There are some 900 U.S. electric cooperatives in the country. KIUC operates as a not-for-profit entity, owned by its members/customers and governed by an elected board of directors.
Under KIUC, Kauai has charged ahead with renewables, and began leaving HECO in the dust long ago. One example is Biofuel, which you may not have ever noticed when visiting the Garden Island.
But, if you’ve ever wondered what is going on with all those closely planted stands of trees along the highway between Halfway Bridge and Omao, here’s the answer. These trees are being grown and harvested for locally produced power.
An 847-acre plot of land seeded with Eucalyptus and Albesia trees and test plots of other species were planted years ago. In all honesty, they weren’t sure exactly what they would do with the trees at the time, but eventually settled on burning them as a fuel source. Later, it was determined that only Eucalyptus should be grown because they are much more energy-dense than Albezia.
There is an ongoing debate about applying the term “carbon neutral” to this type of biomass energy operation, given that the machinery alone needed to harvest, transport, and process trees for burning decidedly tips the balance to being less than 100% carbon neutral. As is the case with many “renewable” energy schemes, there are many other impacts often overlooked.
In any event, such biomass energy is currently considered renewable. It is just one of multiple power generation methods that Kauai has used to position itself farther away from reliance on long-distance importation of fossil fuels. The coop’s current generation portfolio contains a diverse array of renewables, including home-based photovoltaics and massive commercial solar farms spanning the island.
More than 60% of the electricity produced on Kauai is from renewable sources.
Kauai is already far above and beyond the state-mandated milestone of 40% renewable energy generation by 2030. Hawaiian Electric, which serves the other islands, reported 32% renewable in 2022, just about half of Kauai’s production. Previously, Hawaiian Electric said it was still on track to meet the 40% renewable benchmark by 2030, it remains to be seen how this latest disaster will impact this timeline.
West Kauaʻi energy project will move island towards 80% renewables.
Recently, the state appeared to approve permitting and construction of a large-scale project that combines solar, batteries, and pumped hydraulic storage in a system that will also deliver irrigation water.
Barring further complications, that project is set to be operational by 2030 and is set to bring the island’s renewable production up to 80%.
Kauai already generates 100% renewable-sourced daytime energy.
According to KIUC, during the middle of the day, Kauai is often powered by 100% renewable sources, thanks to its ample solar capabilities. However, the output of these systems can vary widely, so adding mass storage will help significantly in offsetting times when power is less available.
As you may know, Hawaii has hoped for the past decade to become 100% renewable energy-based in the next twenty years. While Hawaii as a whole has a long way to go, Kauai is already well on the way.
Kauai jumpstarted Hawaii’s power transition.
The Garden Island has been renewable-focused for years. Kauai is also looking at how to reduce its extreme dependence on automobiles. A plan including improved bus transportation, bicycles, bicycle-sharing, and better walking access is in the works.
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Marriot jacked up time share maintenance fee’s to cover the massive damaged left behind residents living there.
Hawaiian Electric just settled lawsuit; stock up 34%.
BOE,
What happened to the little check box that requested we receive related posts?
And, I still believe we should be able to indicate disagreement with a post. It makes the site more powerful.
Visiting Waikiki Sep 14-30. If you get over that way, send me an email – we can meet for lunch, I’m buying.
Mahalo
Hi Rod.
Mahalo for that help and almost 500 other comments. We see that comment subscription had an issue and we just fixed it. The thumbs down feature was removed by intention to reduce contentious comments. And lastly, thanks, and will do.
Aloha.
The Maui county government should sue themselves. And step down in shame. They did nothing to address wildfire concerns after the 2018 wildfire disaster.
The beginning of this disaster goes back about 175 years when
the water that made Lahaina a lush tropical paradise was diverted
to the sugar cane plantations. 100 hundred years later the sugar cane was replaced with non native grasses which were known to be very flammable. So perhaps you should sue these landowners, HECO and the county.
Great idea!
I’m afraid that will be up to the people. And, everyone actually responsible will band together to make the folks doubt themselves – it’s the way of politicians.
I wouldn’t be surprised at a HECO bankruptcy, but nobody today knows for sure that it will happen. Today I received an email from HECO telling its side of the story, and HECO *may* have some valid points. Attorneys avoid predicting the outcome of litigation.
I own two west Maui properties and had scheduled installation of a solar power system with a tesla battery at my townhome in Puamana, at the south end of Lahaina, for September 14-20. The fire destroyed about 40% of the Puamana community, and my solar system is now on indefinite hold. One of the reasons I planned to get the tesla battery is to avoid paying 44 cents per KWH to HECO for power at night when my panels won’t produce power. There are some weak “buyback” programs that could allow me to sell some excess power back to HECO / the grid, but HECO pays maybe 13 Cents per KHW and apparently the program doesn’t work with tesla batteries. What I think we need is a state or even federal law requiring power companies to buy power not used by owners of solar systems for the same rate they sell the power. Then the grid could substitute for a battery and the percentage of solar produced power would be maximized. If the government can give electric companies a monopoly on grid power, it seems to me that the government can force those companies to make smaller profits so that we can hopefully save this planet and move away from transmitting huge volumes of power through uninsulated power wires on poles.
Your idea of buy back of electric power by the electric companies is totally unrealistic you must be from the government.
The whole point of having a public utility commission is to protect the public from the incompetence of mgt thats for shareholders to deal with as they get a vote. So shouldnt be that way. Reality is its going to cost several million dlrs to bury the power lines vs just go to fuel cells and pipe and or truck the green hydrogen in. The later will have much less capex so will cost less all around to the point that a rate reduction would be possible.
Consider burying power lines underground maybe? Solves a lot of problems, but a a price.
I believe that your news should focus on the legitimacy and probability of HECO’s potential bankruptcy based on Maui County’s alleged claim. There is sufficient validity to claims that the County had failed to responsibility prevent the disastrous effects of the fire.
Two sides of the story would be appreciated. You worry about the rising cost of travel while we worry about the Government taking care of its people!
In California, even if you don’t live in an area impacted by wildfires, PG & E passes the costs on to all their consumers by other “small” increases that our CPUC approves for PGE every year. I imagine the Hawaiian utility would end up doing the same; especially if they have shareholders to answer to. It’s unfortunate the customers pay the price for a company’s mismanagement. The last thing Maui residents need is another financial burden.
The Marshall fire in Colorado was started by Excel power lines that were arcing in 115 mph wind gusts, with dry grass underneath. This happened in December and snow on the ground. Burned 6,000 acres displaced 35,000 people and 1000 homes burned to the ground. Thankfully a snowstorm came in and helped to put out the fire. So all the homes that were burned now need to meet new regulations by installing all green appliances. Plus let’s say your new house has a three car garage, now with the new build the garage will have three EV changing stations.
E’o KIUC!!!! Got a question. If HECO owns American Savings Bank, will customers be affected if HECO goes bankrupt?
Assuming HECO bankruptcy, which seems likely, ratepayers will be saddled with higher bills. Look at PGE (northern Cali) for an example.
The fact that electric rates spiked due to peak oil prices is a bit of a puzzle: there should have been hedges in place to lock in a lot of supply. Maybe not multiple years, but some.
Also, the coal conversion (retirement) could have been deferred.
Maybe everyday man gets schadenfreude from HECO shareholders getting wiped out in a bankruptcy (?)
This is a well-researched and informative article. Although electricity and power isn’t the sexiest topic, it’s quite interesting to read about the dynamics involved…and what the future may hold for utility rates on the islands.
What hops out at me the most in this great article is HECO’s purchase of 33% of its oil from Russia. Dancing with the devil.
Hawaii is a geographically isolated island chain. Yet,most people live like they are living in Mainland USA,; oblivious to Hawaii’s lack of resources-yes,HawIi gets its oil from Russia;; in my mind,; that is a geo political wake up call for lifestyle changes
Doesn’t burning Eucalyptus and Biodiesel cause air pollution?
Doesn’t the CO2 released contribute to climate change?
Sounds regressive.
Rob,
The Clean Energy / Climate Change crowd doesn’t care about that. They have one goal: to end fossil fuel, at all costs and no matter how many lies they have to tell.
Time to spend my vacation dollars elsewhere. Hawaii’s inner workings are the same mess as my home state of CA. Instead of fixing the problems, they pass the buck(s) — literally — by taking it out of the hides of travelers.
For years we’ve taken a 2-week vacation to HI, not skimping on accommodations, meals, etc. When we returned to Kauai last Dec, first trip post-Covid, we were more than Shocked at the added on taxes, parking, entrance fees, etc that had never been charged before. We’d always decided to invest in US states for our travel, but the greed is making us consider other choices for the first time.
Our hearts are with the people of Maui. We have zero confidence that the people will be supported in recovery after the fires. Greed will once again prevail.
What. A. Shame.
Aloha ! Thank you BOH for always keeping us informed about our beloved Hawaii and especially now with the tragedy in Lahaina.
If Hawaiian Electric ends up like PG&E in Calif. and goes into bankruptcy and then the people of Hawaii except for Kauai have to pay alot more for power.
That is just shameful x 1000%.
News reports we get here in SoCal are that gross and unbelievable negligence by Hawaiian Electric caused this tragedy.
You were warned 5 years ago after Paradise,Calif fire, you were warned 5 years ago again about a wildfire in the foothills above Lahaina that was stopped. Local friends have told us that it was a warning sign for the dangerous conditions.
News here again today said alot of the power poles were weakened and leaning and to make it worse,alot of the power lines were not insulated in West Maui and would start a wildfire if they fell to the ground.
It’s happened before in the Ewa plain on Oahu, un insulted power lines started fires. Insulated lines wouldn’t.
We are completely heartbroken for everyone on Maui. Our Oahu Ohana stands with you and is giving relief contributions like we are.
Bless you all, We Love ❤️ You
”lions and togers and bears.”
HECO goes bankrupt.
Cry me a river.
They can Buy HECO for pennies on the dollar after the house is cleaned and all the current “management” are sent packing.
Put in the hands of the residents and customers.
Just like Kauai.
It is working there—Community ownership.
It Will work on Maui.
The article hits the mark. After the fires in California (2017, 2018, 2019) the electric company (PG&E) filed bankruptcy. Rates went up for everyone because of the lawsuits. Yes money was won in those suits but everyone pays except Attorney’s who profit.
Hawaii Electric is in for big trouble.
The Big Island has a new Biomass plant built but the company who built it can’t operate it because of the PUC. This brings the question- why we’re they permitted to built if they can’t use it? Also geothermal wants to expand but red tape is preventing it.
The largest geothermal plant in the world is “The Geysers” in Northern California. Maybe learn lessons from them??
I don’t doubt that this will happen, but if it is 25% or even 12%, the islands will have more problems than they do now. I will not be able to afford any more increases in a rental. I cant even afford it now and it has increase 400.00 since my previous rental during the fires. I am ready to bow out, permanently.
Time to start putting in giant solar farms
One other thing that will happen is that property insurance rates will
increase dramatically and some insurers will withdraw from writing insurance in Hawaii. That is what has already happened in Florida
and California.
I have always believed that a public utility is the way to go. HECO will probably be nearly broke after everything settles. Its way past time to get rid of HECO. Some people will remember they caused many fires on Oahu when downed lines set old cane fields burning out of control esp on the Ewa plain.
Public uti!ity districts answer only to the public Not stockholders. It behooves them to keep updated with safety and equipment. The State must get behind the other islands and demand switching to public utilities. I seriously doubt they will.
Never too early to start thinking about what replaces HECO sources. It would be simplest but foolish to go back to what it was. Renewable is admirable, but keep in mind that Maui is the 2nd largest island by mass, Kauai is 4th. Providing electricity to Maui is like providing it two two islands, west and south. Maui hosts +/- 3Million tourists a year with Kauai hosting a little over one-third that number. Lastly, Maui’s resident population is roughly twice that of Kauai. It will take huge projects to accomplish a Kauai-like goal. Kauai has the advantage of a smaller delivery area and lesser demand than Maui. But I hope that doesn’t stop the aspirations for a newer, greener Lahaina and Maui and Hawaii overall. I am too old to be excited about seeing what Lahaina 3.0 will be, I’ll be long gone before it realizes its new potential. But my kids will get to see it. And they’ll tell their kids about what it was like before.
Vancouver, Washington (Clark County) has had a public utility district for many years. Population there is over 500k, far larger than Kauai. Anyhing is possible if they really want it.
Here In Hilo Hawaii, The Wailuku River, there is a old river generator power plant, they should ( up grade it and expand that system,) that old power plant is still in operation, but needs to be up dated, I think it will help providing some of the Electric power we need, ( use what we have )
Since the Hawaiian electric company (HECO) is expected to go into bankruptcy, this would be a perfect time for Oahu and the island of Hawaii to follow Kauai’s example and form a public owned electric company. For-profit utility companies are first and foremost going to prioritize profits. That means resisting expensive improvements to infrastructure and keeping rates high for consumers. Publicly owned utilities have a greater opportunity to work in the interests of regular citizens.
A few years ago, I was a member with the Big Island Planning commissioner, I was sent to Pahoa on the Big island to visit to learn and see the Geothermal operation, I was told it can provide Electric power to all islands, This way, to provide ( Electric Power,) we should ( real consider using,) we don’t need to depend on Oil, importing oil for the generators cost a lot of money, remember our electric power is from generators, ( we do have for what it takes here in Hawaii ) Aloha to everyone.
PG&E did the exact same thing after accumulating $30 billion in liability from the huge fires in CA. They were too busy spending money and time on “new green infrastructure” to meet Newsom and Browns energy initiatives that they stopped fixing their old infrastructure. Newsom slapped them on the wrist (they do donate to his campaign and his wife’s non-profit), they filed bankruptcy and then the victims got crumbs. Now PG&E have multi million dollar (non bid-handed to them) contracts with the state for green energy. Maui should be very cautious and keep a close eye on what their government will allow the electric company to get away with.
Good comment by SD. Here in California, Newsom shut down the clean energy Diablo Canyon Nuclear Plant. Now that it’s getting ready to shutter, he’s begging PG&E to keep it open.
-thank you for sharing this information
Hi Jeanne.
Thanks. We appreciate your more than 100 comments to date.
Aloha.
I have been to Big Island many times and just in last few years have i seen some solar farms. Way behind Oregon and we don’t have the sunshine like Hawaii. My assumption is electric company fought for some reason or land use laws. Either way good old boy system in Hawaii is alive and well.
Now all eggs in one basket leads to problems. If solar doesn’t work in Hawaii where would it?
We have a big meeting scheduled at the end of September in the Southern part of Maui. Some in our group worry it will be disrespectful to come to a meeting when the Native Hawaiians are asking us to stay out and still grieving . Is there a post from representatives of Kanaka Maoli who are asking tourists to come to the island? It would help people to feel better about keeping the meeting. Thanks.
Somehow, I do not believe that Hawaii Electric will face bankruptcy, as was the case when Pacific Gas and Electric was forced to accept responsibility/liability and subsequent restructuring as a result of the Camp Fire. I think the federal government will come to HELCO’s rescue in some way because there really wasn’t any negligence on their part even though their infrastructure was extremely old and outdated. The source of the damage was caused by winds knocking over wood power poles and the electrical caused fire that ensued. Although there’s a lot of blame to go around in the way this disaster was handled after the fact, HELCO really isn’t to blame. That said, I do agree that power rates will have to rise in order for ratepayers to share at least some of the burden.
Thank you for this article and important information, Jeff and Rob!
It makes me love Kauai even more!
Hi Frieda.
Yes, who ever knew how useful KIUC would be.
Aloha.
When will folks learn that while renewables are great nuclear would solve a number of power issues – clean, safe abundant energy!
Given the vast geothermal resources on bi one wonders why any1 would even think of using pev solar. New research into using high temp heat to make green hydrogen could usher in an era where you have a fuel cell to poweryour home and a fcev car. Given the cost tragetry of $1 / kilo it should cost abt $15 to fully fill up your fcev car in 4 mins for 300 miles of real range in all terains and weather. We could use pipeline to transport tge h2 to other islands and never need to have power lines that cost $1M MIile.
It helps to have a small population and high-end tourists.
Maui County has filed suit against HECO. It is bizarre that the County sued before a cause of the fire was established. I suggest the County strategy is a smokescreen. At this point the public’s knowledge is limited to media accounts which consistently cite the fire started near Lahainaluna, was contained, but not extinguished. Eyewitness accounts report that after the County (Fire Dept) left the scene the fire reignited, blew up and rapidly spread into Old Lahaina. This suggests the County will be named as the cause, or contributing cause, of the fire.
What a difference a day makes.
HECO announced last night the Lahaina power lines were deenergized 6 hours before the fire, which douses the County claim. The stock market rallied today (Monday, 8/28) with a 50% stock price increase for the power company. Apparently, the demise of the power company may be greatly exaggerated.
This disclosure will put a lot more scrutiny on the County, the lawsuit, and responsibility. It may not be premature to predict heads are going to roll.
Apparently the Fire Chief read my post and has “clarified” his statement and says the fire was extinguished at Lahainaluna, not contained as previously reported, notwithstanding multiple reported eyewitness reports that the fire rekindled, blew up and burned Lahaina.
Aloha, As my heart goes out to Maui, maybe it’s time to follow Kuai’s solar and renewable energy. Hopefully solar companies will join the “Aloha” of the people of Maui Strong.
Mahalo
Sandi M
Bravo Kauai! Hope their auto reduction plans don’t include light rail
Why? Kite surfing? Walking? Ferry? What then?
Time to migrate from WW2 era technology burning OIL and follow the path Kauai has taken and get to biomass and other renewables. Yes, it will be costly, but the fact that in 2023 we are still burning OIL to make electricity in such a sensitive ecological environment as Maui is absolutely outrageous.