Electric utilities face billions in damage from wildfires as aging power lines threaten another disaster

Electricity companies in the western United States are facing mounting lawsuits that their failure to prepare for extreme weather events has repeatedly led to catastrophic wildfires that have claimed dozens of lives and caused billions of dollars in damage.

Hawaiian Electric is the latest company to face allegations of negligence. Maui County sued the utility Thursday for damages over its alleged role in this month's devastating Maui wildfires that killed more than 100 people and burned the historic town of Lahaina to the ground.

Maui County's lawsuit is the twelfth lawsuit filed against Hawaiian Electric. The lawsuits allege that the company's fallen power lines contributed to the deadliest wildfire in the United States in more than a century.

The lawsuits allege that the company was negligent in failing to shut off power even after the National Weather Service issued a warning of increased fire risk due to strong winds from Hurricane Dora and drought conditions on the island.

Hawaii Electric pushed back against some of those claims in a statement on Sunday.

Credit agency Fitch said the lawsuit could pose an existential threat to the company. Pacific Gas & Electric in California filed for bankruptcy in 2019 after facing billions of dollars in liability over wildfires.

The allegations against Hawaiian Electric mirror the lawsuits against Hawaiian Electric PG&E in California over the 2018 campfire, Berkshire Hathaway's Pacifi Corp in Oregon because of the 2020 Labor Day wildfires and Xcel energy in Colorado because of the 2021 Marshall Fire.

Before all of these catastrophic wildfires, businesses didn't shut off power despite high winds that can bring down power lines and, combined with dryness or outright drought, pose a high risk of fire.

The forest fire hazard posed by overhead power lines is well documented. According to this, between 1992 and 2020 in the USA more than 32,000 wildfires were ignited by transmission and distribution lines US Forest Service Data.

Paul Starita, an attorney who represents the residents of Lahaina One of the lawsuits against Hawaiian Electric alleged that the utilities are not doing enough to protect their infrastructure against extreme weather conditions and clear scrub to prevent catastrophic fires.

“They just don't do it,” said Starita, senior counsel at Singleton Schreiber, a law firm that has represented 12,000 victims in utility-caused fires. “And if you know the system has a problem, turn off the power,” he said.

The industry suffers from a culture that is slow to change and has historically had a financial incentive not to overspend on infrastructure because its performance is measured by how much money it saves its customers, said Alexandra von Meier , expert for power grids.

“The industry is just changing slower than the climate,” said von Meier, an independent consultant and former professor at the University of California, Berkeley. “The industry needs different standard practices today than it did 10 years ago. They just haven't adjusted yet.”

The failure to adapt quickly to climate change has had disastrous consequences: people have died, homes have been destroyed and the energy companies' own business interests have also been increasingly affected.

At least 115 people died in the Maui fires and hundreds are still missing. The city of Lahaina is destroyed. Moody's estimates that the wildfires caused up to $6 billion in economic losses.

Fitch, Moody's and S&P recently downgraded Hawaiian Electric's credit rating to junk status, Fitch said warning that the company faces a potential liability of more than $3.8 billion for the Maui wildfires.

Though the lawsuits point the finger at Hawaiian Electric, authorities are still investigating the cause of Maui's wildfires. The Bureau of Alcohol, Tobacco, Firearms and Explosives dispatched a team including an electrical engineer to assist the Maui County Fire Department in identifying the source of the fire.

Just two months before the Maui fires, Colorado law enforcement officials determined that a power line from Minnesota-based utility Xcel Energy likely started one of the first two fires that led to the 2021 Marshall Fire in Boulder County. In strong winds, the line had come loose from its mast.

The Marshall fire killed two people, destroyed more than 1,000 homes and dozens of commercial buildings, and burned 6,000 hectares of land. Colorado's Insurance Commissioner put the total property damage at more than $2 billion most expensive forest fire in national history.

Boulder County District Attorney Michael Dougherty said during a news conference in June that no criminal charges had been filed against Xcel because there was no evidence of worn materials, defective construction and poor condition of the power line.

Xcel CEO Bob Frenzel said the company disagreed at all with the investigation's conclusion that the power line likely contributed to the fire. He said Xcel will defend itself vigorously in court against the mounting lawsuits.

The company said it is aware of eight lawsuits representing at least 586 plaintiffs and expects more complaints, according to its latest quarterly report financial records. If Xcel were found liable for the Marshall fire, the total damage could exceed the company's $500 million insurance coverage, the filing said.

Days after Boulder County released its Marshall Fire findings, an Oregon jury made the finding Berkshire HathawayPacifiCorp was responsible for four of the 2020 Labor Day wildfires and ordered the company to pay $90 million in damages to 17 homeowners.

PacifiCorp said the total damages sought in the various lawsuits, complaints and demands filed in Oregon over the wildfires total more than $7 billion, the company's latest filing shows financial records. According to the filing, the utility has already suffered more than $1 billion in losses from the fires.

The Labor Day wildfires in Oregon killed nine people, destroyed more than 5,000 homes and burned 1.2 million acres of land most destructive multiple fire event in the history of the state.

Though the official cause of the fires is still under investigation, homeowners in the class action lawsuit allege that fallen PacifiCorp power lines started the fires. They accused the company of having acted negligently by not turning off the electricity. PacifiCorp has announced it will appeal the June jury verdict, which could take years.

The company said so in its latest financial records that government authorities have informed the company that they are considering action related to some of the wildfires in 2020.

These disasters came years after the devastating year of 2018 campfire in California, that should have served as an urgent, tragic warning to the industry.

The campfire 85 people died, more than 18,000 buildings were destroyed and over 153,000 hectares of land burned. Like Lahaina in the Maui fires, the town of Paradise was almost completely destroyed by the inferno.

The campfire was lit by a power line that PG&E could not maintain with components dating back to 1921. It was the company charged and eventually pleaded guilty to 84 counts of involuntary manslaughter.

PG&E filed for bankruptcy protection in 2019 over $30 billion in wildfire liability. The company settled with the victims for $13.5 billion and emerged from bankruptcy in 2020.

The centuries-old infrastructure that led to the 2018 bonfire, while particularly egregious, is not an isolated problem. As a result, most transmission and distribution lines in the US have reached or exceeded their design lifespan of 50 years American Society of Civil Engineers.

According to ASCE, this aging infrastructure is encountering an increasing number of disasters due to climate change. Maui County has claimed that the wooden utility poles operated by Hawaiian Electric have been severely damaged by decay, putting them at increased risk of tipping over in high winds.

And even if a utility maintains and operates its facilities perfectly, it's nearly impossible to guarantee that overhead transmission and distribution infrastructure will never spark, von Meier said.

The smartest solution is to bury the transmission lines, switchgear and transformers underground, she said. The problem is that it's expensive. Installing electrical infrastructure underground is about ten times more expensive than above ground, said von Meier.

“It's going to be very, very expensive to really strengthen the infrastructure to make it reliable in extreme weather conditions and to prevent fires from happening,” von Meier said. According to ASCE, the US faces a $338 billion investment deficit in electrical infrastructure by 2039.

The Edison Electric Institute, the trade association representing investor-led electric companies, said the industry has invested $1 trillion in upgrading and maintaining infrastructure over the past decade and is on track to exceed $167 billion by 2023 investing US dollars.

“Significant investments are being made in adaptation, hardening and resilience to help mitigate risk,” said Scott Aaronson, EEI director of safety and preparedness.

“Unfortunately, there is no such thing as zero risk. So we're working to mitigate that risk and ensure we're prepared to respond safely and efficiently when incidents do occur,” Aaronson said.

Joseph Mitchell, a scientist who served as a wildfire expert for the California Public Utilities Commission, said that electric companies in the Golden State are moving to bury their lines to mitigate the risk.

But Mitchell said insulating overhead power lines with a protective sheath is also an effective solution that is less expensive and quicker to implement. Technology is also coming to the market that can automatically shut down power lines when there are problems, he said.