RELATING TO PUBLIC UTILITIES.
HB881 establishes the Catastrophic Wildfire Securitization Act, a new framework allowing Hawaii public utilities to recover certain catastrophic wildfire-related costs by issuing “recovery bonds” backed by nonbypassable charges on customer bills. The bill is aimed at costs tied to catastrophic wildfires, wildfire mitigation, disaster relief contributions, litigation, settlements, taxes associated with those costs, and related financing expenses. It is written to let a utility apply to the Public Utilities Commission for a financing order authorizing those costs to be recovered through fixed recovery charges and, where applicable, fixed recovery tax amounts.
The bill requires the commission to approve a financing order if it finds the costs are authorized for recovery and the financing structure is just, reasonable, consistent with the public interest, and expected to reduce ratepayer costs on a present-value basis compared with traditional utility financing. Once approved, the charges are irrevocable except for formulaic true-up adjustments, must appear on customer bills, and continue until the bonds and financing costs are fully paid. The bill also authorizes the utility to sell or assign recovery property, issue bonds in one or more series, and use collection mechanisms that bind successors and survive insolvency proceedings.
HB881 would add a new chapter to the Hawaii Revised Statutes creating a securitization regime for wildfire-related utility costs. It would expand the Public Utilities Commission’s authority to issue financing orders, establish recovery property as a present property right, create statutory liens and security interests in that property, and permit nonrecourse recovery bonds secured by customer charges. The bill also limits the commission’s ability to later alter the financing order or the recovery charges, while preserving customer credits if the utility later receives insurance proceeds, tax benefits, or other reimbursements for the same costs.
The bill’s stated purpose and structure suggest a generally supportive policy rationale centered on protecting utility financial stability, preserving access to capital, and reducing long-term rate impacts on customers after the Lahaina wildfire. The legislative findings emphasize the risk that wildfire-related liabilities and credit downgrades could increase borrowing costs and harm ratepayers, which frames the bill as a financial stabilization measure. No committee transcripts or recorded votes were provided, so there is no direct evidence of debate, amendments, or formal support/opposition in the available record.
The main points of contention likely concern who should bear the costs of catastrophic wildfire losses and how much protection the bill gives utilities and bondholders versus ratepayers. The bill shifts recovery of eligible costs onto existing and future customers in the utility service territory through nonbypassable charges, which may be criticized as socializing wildfire-related costs. It also contains strong provisions making financing orders and charges irrevocable, limiting commission discretion, and insulating recovery bonds and recovery property from setoff, bankruptcy defenses, and later ratemaking changes. Supporters would likely emphasize lower financing costs and utility solvency, while critics may focus on customer burden, reduced regulatory flexibility, and the breadth of the state pledge supporting the securitization structure.