Shares of Hawaiian Electric fell after the county of Maui sued for damages over a deadly wildfire

The county of Maui filed a lawsuit Thursday Electric Hawaii To seek compensation for the deadly wildfires that have killed more than a hundred people and resulted in billions of dollars in property losses.

Hawaiian Electric stock fell 6% in extended trading on news of the lawsuit. The electric company said it would suspend its quarterly dividend beginning in the third quarter to free up funds to help rebuild and restore power in the aftermath of the fires.

Maui County attorneys said Hawaiian Electric left its power lines active without excuse despite a warning from the National Weather Service that Hurricane Dora’s high winds and dry conditions created a significant fire risk.

Wildfires reduced the historic city of Lahaina to rubble in the deadliest blaze in the United States in more than a century and the worst disaster in the history of the state of Hawaii. At least 115 people have died and more than 1,000 are still missing.

Hawaiian Electric released a statement the day the fires occurred as 30 power poles were destroyed in West Maui, the area where Lahaina is located.

“These power lines ignited the rapid, deadly and devastating Lahaina Fire, which has completely destroyed residences, businesses, churches, schools, and historic cultural sites,” the district attorneys said in the lawsuit.

The province of Maui said the death and destruction could have been avoided had the Hawaii Electric Company cut the power. The county cited preliminary estimates from the Federal Emergency Management Agency that rebuilding Lahaina would cost more than $5 billion.

The complaint filed by the District of Maui is the latest in a series of lawsuits against Hawaiian Electric seeking damages for the catastrophic wildfire.

Fitch Ratings recently downgraded Hawaiian Electric to junk status, warning that the company faces an existential threat from more than $3.8 billion in potential liability for the Maui wildfires. California’s Pacific Gas & Electric filed for bankruptcy in 2019 when it faced multibillion-dollar liability for wildfires.

Moody’s estimates that the Maui wildfires have caused economic losses of up to $6 billion.

The province of Maui also said in the lawsuit that its 2020 Risk Mitigation Plan warned that western Maui is at high risk for wildfires. The county said Hawaiian Electric recognized this risk and submitted a $190 million application in 2022 to the state Public Utilities Commission to bolster its electric grid.

Despite this, the county said, Hawaiian Electric has operated power poles made of wood, which are more susceptible to corrosion, in Maui. The county claimed that many of Maui’s wooden poles were badly damaged due to advanced decay that contributed to their failure during high winds.

The county said Hawaiian Electric also knows its overhead transmission lines are not using available technology to reduce fire risks.