Hawaiian Electric stock plunges 40% after lawsuit alleges it failed to shut power off ahead of the Maui wildfires

New York CNN  — 

Hawaiian Electric’s stock tumbled to a 13-year low Monday morning, plummeting nearly 40% after a class-action lawsuit filed over the weekend alleged that Maui’s devastating wildfires were caused by the utility’s energized power lines that were knocked down by strong winds.

The utility says it provides power to 95% of the state’s residents.

The suit alleges that Hawaiian Electric Industries “chose not to deenergize their power lines during the High Wind Watch and Red Flag Warning conditions for Maui before the Lahaina Fire started,” despite knowing the risks of sparking a fire in those conditions.

The company and subsidiaries “also chose not to deenergize their power lines after they knew some poles and lines had fallen and were in contact with the vegetation or the ground,” the suit alleges.

It has not yet been determined what started the wildfire.

Hawaiian Electric vice president Jim Kelly told CNN Sunday via email that, “as has always been our policy, we don’t comment on pending litigation.”

“Our immediate focus is on supporting emergency response efforts on Maui and restoring power for our customers and communities as quickly as possible. At this early stage, the cause of the fire has not been determined and we will work with the state and county as they conduct their review,” he said.

Kelly also told the New York Times that precautionary shut-offs have to be arranged with first responders. “Electricity powers the pumps that provide the water needed for firefighting,” he said.

Hawaiian Electric’s stock has fallen about 47% since the wildfire broke out on August 8, killing at least 93 people, making it the deadliest US fire in more than a century and the fifth deadliest in the nation’s history. Preliminary numbers from research firm CoreLogic put the residential property damages at $1.3 billion, but Hawaii Gov. Josh Green estimates the losses “approach $6 billion.”

Hawaii’s attorney’s general office has launched a formal review of the state’s emergency response and the decisions leading up to the deadly blazes that engulfed the island last week. Some officials and residents have started pointing fingers at the utility company for failing to implement critical safety measures.

In the lead-up to the fires last week, the National Weather Service in Honolulu warned at least four times in a series of tweets that dry conditions and strong winds posed a serious threat of fires in some areas of Hawaii. According to the Western Fire Chiefs Association, electrical systems are one of the most common causes of wildfires.

Despite this, Hawaiian Electric (HE) did not enforce a public safety power shutoff, a temporary pause of service to certain areas due to increased fire risk. These shutoffs are generally initiated by utility companies based on weather conditions.

Utility companies in California have used this preparedness measure to combat wildfires for years and, in instances when they have failed to execute these shutoffs, they have had to pay billions of dollars in damages.

In 2019, Pacific Gas and Electric (PG&E) agreed to several settlements after a state government probe determined that its electrical equipment had caused the 2018 Camp Fire, which killed 85 people. These included an $11 billion insurance settlement, as well as $1 billion paid to affected local governments.

– CNN’s Andy Rose contributed to this report.