CNBC's Spencer Kimball and Gabriel Cortés are reporting that electric utilities face billions in wildfire liability with aging power lines risking another catastrophe.
Electric companies in the western United States, including Hawaiian Electric, are facing a rising number of lawsuits accusing them of negligence in preparing for extreme weather, leading to catastrophic wildfires that have resulted in loss of life and billions of dollars in damages. Hawaiian Electric is the latest to be sued, with Maui County alleging that the company's downed power lines contributed to deadly wildfires. Similar allegations have been made against Pacific Gas & Electric (PG&E) in California, Berkshire Hathaway's PacifiCorp in Oregon, and Xcel Energy in Colorado.
The lawsuits claim that the utilities failed to shut off power despite "red flag" warnings of high fire risk due to factors like high winds and drought conditions. The aging infrastructure of transmission and distribution lines, many of which have exceeded their intended lifespan, is exacerbating the issue. While installing infrastructure underground is a more reliable solution, it's expensive.
The utilities face significant financial and legal repercussions. Moody's estimates that the Maui wildfires have caused up to $6 billion in economic losses. Credit agencies like Fitch, Moody's, and S&P have downgraded Hawaiian Electric's credit rating to junk status due to potential liabilities. The power companies' failure to adapt quickly to climate change and improve their infrastructure has led to devastating consequences.
The article highlights the complex decision-making around shutting off power during high-risk conditions. While there are risks associated with power shut-offs, it underscores the need for better planning and guidelines. The ongoing legal battles and financial challenges underscore the urgent need for utilities to adapt their practices and infrastructure to mitigate the risk of wildfires sparked by power lines.
(This article was written with the help of ChatGPT)