Bonds

Hawaii governor fails to resuscitate HECO bond bill

Hawaii Gov. Josh Green failed to convince lawmakers to consider legislation that would have allowed struggling Hawaii Electric Co. to issue bonds backed by a rate increase.

Senate Bill 2922, introduced by Senate Commerce and Consumer Protection Chair Jarrett Keohokalole, would have allowed HECO to issue up to $2.5 billion in low-interest bonds, if it submitted a wildfire protection plan to the Public Utilities Commission for approval.

The measure was in limbo after Keohokalole announced April 25 he was deferring Senate Bill 2922 indefinitely, which would normally kill the bill for this session.

Green sent a letter to Keohokalole that day asking lawmakers to keep working on the bill over the weekend and into this week, and offering to make his office available for meetings on the subject.

“This is a bill of enormous importance for our state,” Gov. Josh Green wrote to lawmakers in a letter asking them to continue discussion on the bill. “Our energy future and the stability and reliability of the utility is riding on this bill.”

Hawaii Governor’s Office

The governor’s office confirmed Thursday Green’s efforts to resuscitate the bill had failed.

“We’re very disappointed in the outcome, but we’re looking ahead, working on our wildfire safety plans for communities most at risk and working with those who are interested in bills for next year,” said Daren Pai, HECO’s manager of external communications.

HECO has been struggling financially since the tragic wildfire that decimated the town of Lahaina on Maui, killing 101 people. The utility is facing hundreds of lawsuits and its bond ratings plummeted to junk within days after the blaze virtually leveled the town.

The Legislature adjourned Friday “and it is too late for any bill to pass due to constitutional deadlines,” according to an emailed response from the governor’s office. “There is no plan for a special session. Should there be some agreement reached with the House and Senate before next session, or should there be some urgent and significant change for the utility in the next few months, the governor is open to a special session.”

If not, the governor intends to continue discussions and negotiations over the bill and see about having it reintroduced when the next session begins in January 2025, according to the governor’s office.

Keohokalole didn’t return a call requesting comment.

“This is a bill of enormous importance for our state,” Green wrote in the letter attempting to convince lawmakers to extend talks. “Our energy future and the stability and reliability of the utility is riding on this bill.”

He added, he “understood concerns about the finances of the utility and its plans on how it would use securitization if enacted, I believe those concerns can be addressed.”

With the bond measure off the table for the time being, the electric company will step up efforts to convince the Hawaii Public Utilities Commission to allow it to use money owed by customers and other parties as collateral to establish lines of credit, according to an article in Honolulu Civil Beat. HECO needs approval from commissioners to sell accounts receivable and to obtain a long-term credit line to replace its short-term line. In February, HECO asked regulators to approve its request by May 16.

HECO told regulators it has been unable to access the capital markets or issue commercial paper since its bond ratings were downgraded to junk, according to Civil Beat. As a result, it can’t obtain financing needed for core operations and investments to ensure public safety and reliable service.

During a legislative hearing on the bill last month, HECO’s Chief Executive Shelee Kimura testified that if the bill didn’t pass, “we don’t have a lot of options on financing, unless we can settle the litigation.”

In response to a question, Kimura said HECO’s strategies all aim to avoid bankruptcy, because “we don’t think that is the best strategy for Hawaii.”

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