Hawaiian Electric (NYSE: HE) is pushing back on claims its power lines caused the deadly Lahaina wildfire, and investors appear encouraged by the effort. Shares of Hawaiian Electric are up more than 44% for the week as of Thursday afternoon, according to data provided by S&P Global Market Intelligence, as markets continue to weigh the utility’s exposure to the fires.
The tragic fires that swept through Maui earlier this month are now out, but the investigation continues into the exact cause and what can be done about it. Some of the initial focus has been on Hawaiian Electric, with lawsuits already filed claiming the utility company failed to shut down power lines ahead of Hurricane Dora hitting the island.
On Monday, Hawaiian Electric pushed back on the accusations. Company CEO Shelee Kimura called a lawsuit filed by the local government “factually and legally irresponsible,” saying “we were surprised and disappointed the County of Maui rushed to court even before completing its own investigation.”
Hawaiian Electric says high winds knocking down power lines does appear to have caused a fire near Lahaina on the morning of Aug. 8 but said that firefighters put out that blaze. The company said it had cut power for more than six hours before a second fire broke out nearby.
Shares of Hawaiian Electric initially plunged more than 18% following the lawsuits, and even after this week’s rally are still more than 60% below where they were on Aug. 1. There’s good reason for continued caution.
Wildfires are a major risk for Western utilities. PG&E (NYSE: PCG) ended up in bankruptcy after its equipment was linked to wildfires that spread across California in 2017 and 2018. Other utilities, including Berkshire Hathaway‘s (NYSE: BRK.A) (NYSE: BRK.B) Pacific Power, have been hit with judgments.
It will take time for the investigations to conclude, and it is possible there will be no definitive conclusion as to what started the deadly fire. Given the uncertainty, investors would be well-advised not to jump in and out of the stock based on new headlines.
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