Hawaiian Electric's Deferred Grid Left 130,000 in the Dark; Storm Hardening Should Start With Maintenance Spend

When Hurricane Lala weakened to a tropical storm Sunday, it left more than 130,000 households without power across Hawaii's three largest islands, knocked roofs off 19 buildings, and killed at least one person in a car accident as residents fled dangerous conditions.^[3][5] The outage lasted days in some areas; on the Big Island and in Maui County, customers remained dark overnight as hazardous weather and flooded roadways kept crews sheltered.^[2] Three hospitals ran on generators.^[5] This is the moment Hawaiian Electric will cite when it files the inevitable hardening rider, asking ratepayers to fund undergrounding, vegetation clearance, and pole replacement as an emergency surcharge. Before that case is filed, ratepayers and regulators need to ask a harder question: how much of that storm damage was deferred maintenance, and who funded it?

The accountability chain is straightforward and discoverable. FERC Form 1, which Hawaiian Electric files annually with the Public Utilities Commission of Hawaii, shows what the utility collected in depreciation and O&M allowances for distribution plant, what it actually spent on vegetation management and pole inspection, and what it paid out as dividends to shareholders. When a utility collects maintenance funding for forty years, underspends the actual work, distributes the savings as shareholder returns, and then asks ratepayers to rebuild the same grid after a storm, it is asking customers to fund infrastructure twice. The first time was buried in the rates they already paid. The second time is the surcharge. The audit trail is there; the journalism move is to build it before the surcharge request lands.

Lala's damage is real and the need for grid hardening in Hawaii is genuine. But hardening costs that flow from imprudent past maintenance belong to shareholders via disallowance, not ratepayers via rider. The regulatory lever is called a prudence review. When Hawaiian Electric comes forward with hardening costs, the Public Utilities Commission of Hawaii should require the utility to show its annual vegetation-management budget, pole-inspection spending, and actual O&M-per-mile versus the depreciation allowance granted in recent rate cases. If the utility harvested maintenance dollars for years, the cost of repairing what was deferred belongs in the shareholder column. That discipline would also change the incentive: utilities that know deferred maintenance will hit their earnings in the next storm will maintain the grid.

The comparison is nearby. Hawaii's municipal and cooperative utilities, which serve smaller customer bases but operate under the same weather and use the same equipment, report SAIDI (System Average Interruption Duration Index) and SAIFI (System Average Interruption Frequency Index) metrics to the EIA. A five-year SAIDI trend comparing Hawaiian Electric's reliability (including major storm events) to Hawaii's public-power systems would show whether investor-owned operation is delivering reliability commensurate with the dividend it extracts. If public-power customers experience fewer outage minutes per year despite the same climate, the question is not weather; it is maintenance spend per customer and where the cash goes after it is collected.

The alternative is already on the table. Hawaii adopted a performance-based regulation (PBR) framework for Hawaiian Electric in 2020, modeled on Britain's RIIO system. That framework can bolt a symmetric reliability performance incentive mechanism (PIM) onto rates: if Hawaiian Electric beats a SAIDI target, it earns a capped reward; if it misses, it loses revenue. That risk cuts into earnings and focuses utility attention on what matters to customers. Combined with a totex (total expenditure) allowance that removes the bias toward building new capital over maintaining existing plant, and with a prudence review that disallows hardening costs flowing from past neglect, PBR closes the loophole. Until then, storm damage and deferred maintenance look the same to the customer; to the utility, one is a chance to raise rates and the other is an operational cost. The difference is a policy choice.