SB1648 SD1

SECTION 1. The legislature finds that in June 2024, Honolulu's downtown and Chinatown experienced multiple power outages, the largest of which resulted in the loss of power for roughly three thousand customers of Hawaiian Electric. Local businesses suffered devastating losses totaling thousands of dollars as a result of the power outages: perishable inventory went bad, dark storefronts led to a drop in foot traffic, and equipment was damaged due to power fluctuations. For the small businesses affected, these issues threatened their ability to make payroll, pay bills, and timely pay rent. As the businesses dealt with these threats, they also bore the burden of filing claims with Hawaiian Electric for compensation within thirty days, complete with supporting documentation. Over three hundred claims were filed with Hawaiian Electric in the aftermath of the blackouts, nearly half as many as were filed with the utility in the entire preceding year, but even so, news reports indicated that many more potential claims were not filed due to uncertainty or doubt about whether Hawaiian Electric would cover certain losses or ultimately compensate the business for damages.

The legislature further finds that the uncertainty was understandable and continues to persist today. For example, according to Hawaiian Electric's website, customers can file a damage claim for "any loss caused by [an] outage" (although elsewhere on the website, claims appear to be limited to "sensitive electronic equipment ... damaged as the result of a power outage"). But, under rule 16 of the public utilities commission, a utility is only required to compensate customers for losses "determined by the Company to be within the Company's control." Not surprisingly, utilities rarely determine that a loss or damage was within their control; in 2023, ninety per cent of damage claims filed with Hawaiian Electric were denied. Even when a claim is approved, the time between the outage and payment can be excruciating. A month after the Chinatown blackout, the investigation into the cause of the outage had not been completed, no claims had been paid out, and Hawaiian Electric had instead issued "courtesy payments" of $500 for those business customers who submitted claims. In November 2024, businesses finally received an update: Hawaiian Electric had determined that it was not responsible for the outages but offered to cover up to fifty per cent of losses "as a gesture of goodwill".

The legislature further finds that this system unacceptably fails to provide utility customers with a clear, fair, equitable, and efficient system through which they are compensated for losses stemming from power outages. Other states such as Illinois have modified their statutory regimes to address this problem by shifting the burden of responding to these losses to the utility, rather than the customer. Illinois' system provides that when a power outage exceeds a certain threshold, the utility must compensate customers for all actual damages incurred due to the outage. The utility can seek a waiver by demonstrating to the utilities commission that the outage was a result of narrowly delineated circumstances legitimately beyond the utility's control, but in all other cases, compensation must be paid. The legislature additionally finds that the implementation of a similar scheme in the State will greatly reduce uncertainty and financial precarity stemming from losses incurred during major power outages.

Accordingly, the purpose of this Act is to:

(1) Create a default rule requiring a regulated utility to compensate customers for all actual damages incurred as a result of a power interruption affecting more than one thousand customers for four or more hours;

(2) Enable a regulated utility to seek a waiver from the public utilities commission relieving them of the obligation to compensate customers, but only if the public utilities commission determines that the interruption was the result of a specific subset of circumstances legitimately outside of the utility's control;

(3) Prevent a regulated utility from recovering losses and expenses from ratepayers; and

(4) Establish a clear timeline under which a regulated utility must pay compensation or seek a waiver, and under which the public utilities commission must issue a decision on a waiver sought by a regulated utility.

SECTION 2. Chapter 269, Hawaii Revised Statutes, is amended by adding a new section to part IX to be appropriately designated and to read as follows:

"§269- Power outage compensation. (a) If more than one thousand of the total customers of an electric utility are subjected to a continuous power interruption of four hours or more during which there is a total loss of power transmission or power is transmitted at less than fifty per cent of the standard voltage, the utility shall compensate customers affected by that interruption in an amount equal to actual damages suffered as a result of the power interruption. Actual damages shall not include consequential damages or litigation costs.

(b) The utility shall also reimburse any hospital or government entity for any power interruption as described in subsection (a) in an amount equal to the emergency and contingency expenses incurred by the hospital or government entity as a result of the power interruption.

(c) A waiver of the compensation and reimbursement requirements under subsections (a) and (b) may be granted by the commission if the utility can demonstrate that the power interruption was a result of the following:

(1) Unpreventable damage due to weather events or conditions;

(2) Customer tampering;

(3) Unpreventable damage due to civil or international unrest or animals; or

(4) Damage to utility equipment or other actions by a party other than the utility, its employees, agents, or contractors.

The loss of revenue for a utility or the expenses incurred by the utility for complying with this subsection shall not be recovered from ratepayers.

An application for a waiver under this subsection shall be submitted to the commission within thirty days of the power interruption. If a utility fails to submit an application for a waiver within thirty days, the utility shall be deemed to forfeit its right to obtain a waiver under this subsection.

Within ninety days of submission of the application for a waiver, the commission shall issue a decision to deny or approve the application.

The public utilities commission may adopt rules in accordance with chapter 91 to carry out the purposes of this subsection.

(d) No later than twenty-four hours before planned or routine maintenance or repairs of a utility's equipment that will result in transmission of power at less than fifty per cent of the standard voltage, a loss of power, or power fluctuation, the utility shall make reasonable efforts to notify potentially affected customers.

(e) Claims under this section shall be submitted to the utility within one hundred fifty days of the power interruption, unless extended by the governor or the commission.

(f) The utility shall have thirty days from the commission's decision under subsection (c) or thirty days from the date the claim is submitted to the utility, whichever is later, to issue a decision to approve, deny, or partially approve and partially deny the claim; provided that the commission may for good cause extend the deadline to issue a decision. No claim amount for actual damages shall be denied by the utility unless the utility obtains a waiver under subsection (c). Payments for an approved or partially approved and partially denied claim shall be made on the date of the utility's decision. Payments shall not be recovered from funds collected from utility rate payers.

(g) If a utility issues a decision to deny or partially approve and partially deny a claim, the claimant shall have a right of appeal to the commission; provided that the appeal is filed within thirty days after the decision was mailed to the claimant.

(h) This section shall not diminish or replace other civil or administrative remedies available to a customer or a class of customers, including the commission's authority to fine and impose other penalties on a utility.

(i) The commission, by rule adopted under chapter 91, shall require an electric utility to maintain service records detailing information on each instance of transmission of power at less than fifty per cent of the standard voltage, loss of power, or power fluctuation that affects ten or more customers. Occurrences that are momentary shall not be required to be recorded or reported. The service record shall include the following information for each occurrence:

(1) The date;

(2) The time of occurrence;

(3) The duration of the incident;

(4) The number of customers affected;

(5) A description of the cause;

(6) The geographic area affected;

(7) The specific equipment involved in the fluctuation or interruption;

(8) A description of measures taken to restore service;

(9) A description of measures taken to remedy the cause of the power interruption or fluctuation;

(10) A description of measures taken to prevent a future occurrence;

(11) The amount of remuneration, if any, paid to affected customers; and

(12) A statement of whether the fixed charge was waived for affected customers.

A copy of each record shall be filed with the commission and shall be available for public inspection. Copies of the records containing this information shall also be publicly available on the utility's website for not less than ten years after the date of the occurrence.

The commission, by rule adopted under chapter 91, shall require an electric utility to submit a report to the legislature no later than twenty days prior to the convening of the regular session of 2026 detailing the extent to which the electric utility already maintains service records in accordance with this subsection."

SECTION 3. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

SECTION 4. New statutory material is underscored.

SECTION 5. This Act shall take effect on July 1, 2050.

THE SENATE	S.B. NO.	1648
THIRTY-THIRD LEGISLATURE, 2025		S.D. 1
STATE OF HAWAII