Hawaiian Electric Industries Inc. has tentatively agreed to a settlement of over $4 billion to resolve numerous lawsuits related to the wildfires that ravaged Maui last year, as reported by Bloomberg L.P.
The agreement, which still awaits final approval, aims to settle claims from thousands of homeowners and businesses against Hawaiian Electric, which operates the island’s utility.
The proposed settlement also includes other defendants, such as a unit of Charter Communications, as well as state and local governments.
The settlement amount is currently below the estimated $5.5 billion in damages caused by the fires, which destroyed 2,207 structures, primarily residential.
The settlement’s finalization is still pending, and it is possible that the deal may not be completed.
Following news of the tentative settlement, Hawaiian Electric shares saw a significant increase, rising 40% in premarket trading to $17.85 as of 5:13 am in New York.
Despite the pending approval, the financial markets have responded positively.
However, it remains uncertain how the $4 billion liability will be divided among the involved companies and governments.
Sources indicate that Hawaiian Electric is expected to cover approximately $1.5 billion of the settlement.
The payout from the proposed settlement will be distributed over a four-year period, though specific allocations are still being determined.
The financial recovery for homeowners and business owners from the proposed settlement remains unclear.
Insurers are seeking nearly $2 billion from the settlement as reimbursement for claims already paid, while lawyers representing homeowners and business owners have proposed a counteroffer exceeding $600 million.
The tentative agreement was reached through court-ordered mediation sessions, with a judge yet to sign off on the proposal.
Hawaiian Electric faced criticism for not shutting off power in August 2023 despite warnings of critical fire conditions due to dry, gale-force winds.
The resulting disaster significantly impacted the company’s financial health, leading to a loss of more than half of its market value and a downgrade to junk credit ratings.
Maui County officials are set to discuss the settlement at a hearing on Friday.
Although they have not disclosed the proposed settlement amount, they expressed openness to a negotiated resolution in local TV news reports.
The county has sued Hawaiian Electric for failing to adequately prepare equipment for wildfire risks, while the utility has filed a countersuit blaming the county.
The consolidated cases are before Judge Peter Cahill in the Circuit Court of the Second Circuit, State of Hawaii.
None of the cases have been scheduled for trial yet.
