Liability Cap Rulemaking

Act 258, codified into law under Hawaii Revised Statutes (“HRS”) 269-27.9, directs the PUC to initiate a rulemaking proceeding pursuant to HRS Chapter 91 “to establish the maximum amount each electric utility may pay to resolve claims arising from any covered catastrophic wildfires, as defined in section 663-8.8, for set periods of time established by rules . . .” without materially impacting each electric utility’s ability to provide adequate and safe service consistent with the public interest.  The PUC was directed to draft liability cap rules that apply to each electric utility (including electric cooperatives), and the PUC has “sole discretion” to establish the caps and time periods to which those caps apply.

This work is part of Hawaii’s broader effort to strengthen long-term wildfire resilience, recovery preparedness, and utility system stability.

To assert eligibility under an established liability cap, an electric utility must have an approved wildfire mitigation plan “and shall have sought and received a determination from the commission that the plan is being implemented on the timeline approved by the commission,” and “be in full compliance with any conditions and reporting requirements established by rule . . . .”

Act 258 requires that the final rules be presented to the Governor and are subject to the Governor’s approval within 21 days, after which they will be considered adopted if the Governor does not affirmatively approve/reject. If the Governor rejects the rules, the rules get returned to the PUC with the reasons for disapproval, and if needed, the PUC starts the rulemaking process anew.

Liability Cap Definition

A liability cap sets a maximum amount that an electric utility may be required to pay in economic damages if its equipment is found to have caused or contributed to a catastrophic wildfire, provided the utility was following its approved wildfire mitigation plan. A liability cap does not determine how victims are compensated; rather, it defines the extent of utility financial responsibility within a broader wildfire recovery and resilience framework.

This framework is designed to create a clear, predictable system for how financial responsibility is handled before the next disaster occurs.

What the Liability Cap Does

  • Defines financial limits: Establishes a maximum level of economic damages utilities may be responsible for in a wildfire event
  • Supports continued operations: Helps ensure utilities remain financially stable and able to provide essential services after a disaster
  • Enables compensation systems to function: Supports more predictable and timely compensation pathways for impacted communities
  • Reduces uncertainty and cost impacts: Creates greater predictability that can help limit cost pressures on ratepayers

Important: This framework does not remove accountability. It is designed to balance financial responsibility, community recovery, public accountability, and system stability.

Relationship to Wildfire Recovery Fund

The liability cap is one part of a broader recovery and resilience framework.

  • A liability cap defines how much utilities may pay in damages
  • A wildfire recovery fund would expedite payouts to claimants

While related, the liability cap and a wildfire recovery fund serve different functions and are intended to work together as part of a broader resilience framework.

These tools are interconnected and designed to work together. The State’s Wildfire Recovery Fund Study found that:

  • Liability frameworks and recovery funding mechanisms are interdependent
  • Effective disaster response requires both financial limits and recovery pathways

This rulemaking builds directly on those findings and is intended to inform how these systems function together.

Why This Matters

Hawaii is working to establish a framework that:

  • Supports timely and reliable recovery for impacted communities
  • Maintains affordable electricity rates
  • Ensures financial stability of utilities
  • Encourages ongoing investment in wildfire mitigation and resilience

This is a proactive effort to define how responsibility, risk, and recovery are balanced before the next disaster occurs and not after.

MORE INFORMATION

See related Commission pages:

Updated 5/2026