HB2700 SD1

PART I

SECTION 1. The legislature finds that as the risk of catastrophic wildfires in Hawaii has increased, so has the threat of property damage from these fires. Although most property owners have insurance, some do not, and others have insurance that may not fully cover their losses.

The legislature further finds that when the cause of a wildfire is uncertain or contested, costly and protracted litigation ensues. Litigation regarding wildfire damages can impose massive costs, including on the State, counties, utilities, landowners, and other defendants that may be alleged to have contributed to catastrophic wildfires. Those costs can overwhelm major institutions in the community, undermining their ability to make investments that the State needs. Indeed, even the possibility of litigation regarding a future catastrophic wildfire can create a cloud of uncertainty that can impair an entity's ability to attract capital on reasonable terms--capital that is vital for making investments in wildfire prevention, among other priorities that may affect the health and safety of the State's residents.

The legislature also finds that the risk of property damage stemming from catastrophic wildfires may lead property insurers to raise rates or refuse to provide coverage for certain losses or certain high-risk areas of Hawaii--as occurred in the wake of hurricane Iniki with respect to hurricane insurance.

The legislature additionally finds that it is in the public interest to take steps to ensure that property insurance remains available to cover losses associated with wildfires by providing benefits to property insurers. Furthermore, the legislature finds that it is in the public interest to ensure that the threat of wildfires does not make investment in Hawaii's public utilities so financially risky that it becomes too costly or impossible for them to raise capital to implement vital plans, including plans to mitigate wildfire risk, and to provide safe, reliable, and affordable service to the people of the State.

Moreover, the legislature finds that it is in the public interest to avoid the costs of litigation arising out of catastrophic wildfires in order to protect Hawaii's economy and encourage investment in the State. The legislature further finds that a fund of this nature would suit the public interest as an element of sound wildfire mitigation planning. Therefore, the purpose of this part is to serve the public interest in the event of a devastating wildfire by establishing a means to provide compensation for property damage resulting from wildfires.

SECTION 2. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"Chapter

WILDFIRE RELIEF FUND

§ -1 Definitions. As used in this chapter:

"Administrator" means the wildfire relief fund administrator appointed pursuant to section -5.

"Board" means the wildfire relief fund corporation board of directors created pursuant to section -4.

"Catastrophic wildfire" means a wildfire occurring on or after the effective date of this Act that damages or destroys more than five hundred residential or commercial structures.

"Contributor" means any person who contributes to the wildfire relief fund as provided in section -7.

"Corporation" means the wildfire relief fund corporation established pursuant to section -3.

"Electric utility" means a public utility that exists for the furnishing of electrical power.

"Fund" means the wildfire relief fund established pursuant to section -2.

"Investor-owned utility" means a public utility that is owned by shareholders and overseen by a board of directors elected by shareholders.

"Other governmental entities" refers to governmental entities, including county government agencies, other than state government agencies.

"Public utility" has the same meaning as defined in section 269-1.

§ -2 Wildfire relief fund; establishment. (a) There is established outside the state treasury a wildfire relief fund and any accounts thereunder to carry out the purposes of this chapter.

(b) The fund shall be placed within the department of commerce and consumer affairs for administrative purposes. The fund shall be a public body corporate and politic.

(c) Moneys deposited in the fund and any accounts thereunder shall be held by the fund, as trustee, in a depository, as defined in section 38-1, or according to a similar arrangement at the discretion of the board.

(d) All moneys received by the wildfire relief fund corporation under this chapter shall be paid immediately to the director of finance and shall become a part of the fund.

(e) All payments authorized to be made by the corporation by this chapter, including all payments for claims for catastrophic wildfire damages, all salaries, and all other expenses, shall be made from the fund.

(f) The moneys in the fund shall be invested according to the same investment plans developed for the Hawaii retirement savings special fund pursuant to chapter 389, and the earnings from the investments shall be credited to the fund.

(g) All moneys in the fund shall be appropriated and expended exclusively for the uses and purposes set forth in this chapter; provided that this section shall not be deemed to amend or impair the force or effect of any law of this State specifically authorizing the investment of moneys from the fund.

(h) The fund shall not be subject to chapter 431.

§ -3 Wildfire relief fund corporation; establishment; purposes; duties. (a) There is established the wildfire relief fund corporation, which shall be an independent public body corporate and politic.

(b) The corporation shall be established within the department of commerce and consumer affairs for administrative purposes.

(1) Eligible claims arising from catastrophic wildfires from the fund; and

(2) Contributions of contributors to the fund.

(d) The corporation shall:

(1) Receive, process, and determine payments for eligible claims for property damage arising from catastrophic wildfires from the fund;

(2) Determine and enforce the collection of contributions from contributors to the fund;

(3) Retain, employ, or contract with officers; experts; employees; accountants; actuaries; financial professionals; and other advisers, consultants, attorneys, and professionals, as may be necessary in the administrator's judgment, for the efficient operation, management, and administration of the corporation;

(4) Enter into contracts and other obligations related to the operation, management, and administration of the corporation;

(5) Purchase insurance or take other actions to maximize the claims-paying resources of the fund;

(6) Pay costs, expenses, and other obligations of the corporation from the fund's assets;

(7) Take any actions necessary to collect any amounts owed to the fund; and

(8) Undertake other activities related to the operation, management, and administration of the fund, as approved by the board.

§ -4 Wildfire relief fund corporation; board of directors. (a) There is established a wildfire relief fund board of directors, which shall consist of members appointed by the governor in accordance with section 26-34. The board shall be the policy-making body of the corporation. The board shall be responsible for adopting policies for the administration and operation of the fund and the performance of other duties and functions assigned to the fund, to the degree not specified in this chapter.

(b) The members of the board shall serve staggered terms, with one-half of the members' initial terms ending four years after the initial appointment, and one-half of the members' initial terms ending six years after the initial appointment. Thereafter, each member shall serve four-year terms. Vacancies shall be filled for the remainder of any unexpired term in the same manner as the original appointments.

(c) The chairperson of the board shall be elected from among the appointed members of the board. A majority of all members currently appointed to the board shall constitute a quorum to conduct business, and the concurrence of a majority of all members currently appointed to the board shall be necessary to make any action valid, unless otherwise specified in this chapter.

(d) Members of the board shall be appointed to ensure:

(1) A broad and balanced representation, with proper judgment, character, expertise, skills, and knowledge useful to the oversight of the corporation; and

(2) Diversity with regard to viewpoints, background, work experience, and demographics.

The members of the board shall serve without compensation but shall be reimbursed for actual and necessary expenses, including travel expenses, incurred in the discharge of their duties.

(e) The board shall meet at least once every three months at a time and place determined by the board. The board shall meet at other times and places as determined by the call of the chairperson or by a majority of the members of the board.

(f) No later than twenty days before the convening of each regular session of the legislature, the board shall submit to the legislature and governor a report regarding the activities and operations of the corporation during the preceding year. The report shall include, at a minimum, a description of:

(1) The effectiveness of the fund's claims-payment process; and

(2) The level of participation in the fund by all eligible participants, including property owners, property insurers, and contributors.

(g) Each member of the board shall retain all immunities and rights provided to a member pursuant to section 26-35.5.

§ -5 Wildfire relief fund corporation; administrator. (a) The board shall appoint an administrator and oversee the administrator's management and administration of the corporation.

(b) The administrator shall serve at the pleasure of the board and shall be exempt from chapter 76.

(c) The administrator shall have powers as are necessary to carry out the functions of the corporation, subject to the policy direction of the board.

(d) The administrator may employ, terminate, and supervise employees, including assistants, experts, field personnel, and clerks, as may be necessary for the administration of the corporation.

(e) The board may overturn any decision of the administrator through a majority vote.

(f) At the direction of the board, the administrator shall prepare and present for approval a plan of operations related to the operations, management, and administration of the fund on an annual basis. At least annually and at the direction of the board, the administrator shall submit the plan of operations to the appropriate policy committees of the legislature. The plan shall include but not be limited to reporting on the fund's assets and projections for the duration of the fund.

(g) At the direction of the board, the administrator shall at least annually prepare and publish on the corporation's website a public-facing report that describes the operations and activities of the corporation and fund during the preceding year, including a description of the financial condition of the fund.

§ -6 Wildfire relief fund corporation; audit. (a) The auditor shall conduct an annual financial audit of the corporation and fund pursuant to chapter 23. As part of this audit, the auditor may contract with a firm qualified to perform an independent actuarial review.

(b) The auditor shall determine the scope of the review required by this section, which shall include but not be limited to:

(1) A review of the sources and uses of the moneys in the fund;

(2) A reconciliation of changes in actuarial assumptions and reserve values from the preceding year;

(3) An examination of the development of claim reserve inadequacies or redundancies over time; and

(4) An assessment of the future financial viability of the fund.

(c) The corporation shall cooperate with the actuarial firm in all respects and shall permit the firm full access to all information the firm deems necessary for a true and complete review. Information provided to the actuarial firm conducting the annual review shall be subject to the same limitations on public inspections as required for the records of the corporation.

(d) The audit required by this section shall be conducted using both generally accepted accounting principles and the generally accepted government auditing standards.

(e) The cost of the audit required by this section shall be paid by the corporation.

(f) The auditor shall issue an annual report to the legislature and governor on the results of the audit and review. The audit and report of the review performed by the independent actuarial firm shall be available for public inspection, in accordance with the auditor's established rules and procedures governing public disclosure of audit documents.

§ -7 Wildfire relief fund; participation. (a) The following entities may participate in the fund as contributors:

(1) The State;

(2) Electric utilities;

(3) Public utilities that are not electric utilities that contribute to the risk of occurrence or severity of a catastrophic wildfire, including but not limited to public utilities for the production, conveyance, transmission, delivery, or furnishing of gas;

(4) Other governmental entities; and

(5) Private property owners who own, or whose affiliated persons or entities own in the aggregate, at least acres of land in Hawaii.

(b) To participate in the fund, an entity shall:

(1) Notify the administrator that it intends to participate in the fund by in the year preceding the year in which the entity seeks to participate in the fund; and

(2) Have made required contributions to the fund pursuant to section -8.

(c) A contributor that is also a property owner in Hawaii may make a claim to the fund for compensation in the same manner provided for in section -13 as other property owners; provided that the contributor:

(1) Shall retain all of the rights, privileges, and obligations of a contributor; and

(2) Notwithstanding any other provisions of this chapter and regardless of the existence of a depletion event under section -16(c), shall be bound by the limitation on claims under section -18.

(d) Any person or entity that poses a risk of causing or exacerbating the severity of a catastrophic wildfire that is not eligible to participate as a contributor in the fund may submit an application to the board for participation.

(e) The board shall adopt rules pursuant to chapter 91 and issue criteria for applications submitted under subsection (d).

(f) The board shall include in its annual report to the legislature and governor under section -4 all applications submitted under subsection (d) and shall recommend to the legislature whether participation criteria for contributors should be broadened.

§ -8 Wildfire relief fund; funding. (a) Total capitalization. The total capitalization amount of the fund shall be $ . Neither the board nor the administrator may modify the total capitalization amount, except as otherwise expressly provided in this chapter.

(b) Actuarial study. The board shall commission an actuarial study to be completed in 2024 to assess whether the total capitalization amount should be increased or decreased based on a holistic assessment of the risk of catastrophic wildfires in Hawaii and the potential exposure of the fund to claims arising out of catastrophic wildfires. The board shall include this assessment in the annual report that it submits to the legislature and governor under section -4.

(c) Time to total capitalization. The administrator shall recommend to the board, and the board shall, by majority vote, approve initial contribution amounts under $ for potential contributors, other than the State and electric utilities, based on the actuarial factors identified in subsection (b) and with the goal of, to the extent reasonably possible, having the fund reach the total capitalization amount within five years of the effective date of Act , Session Laws of Hawaii 2024, taking into consideration reasonably expected investment returns and assuming no payments will be made by the fund during that time period.

(d) Capitalization amounts. With the exception of the contribution made by the State in paragraph (4), contribution amounts shall be divided by the administrator into an initial contribution amount to be made by , and annual contribution amounts to be made over a five-year period, subject to the administrator's ability to increase payments under the insufficient funding provision in subsection (g).

The fund shall be capitalized by the following contributions:

(1) From other governmental entities that are eligible to participate in the fund, an amount determined by the administrator based on an actuarial assessment of the risk of payments to these entities by the fund resulting from catastrophic wildfires created by these entities, as well as the risk of potential payments made by the fund resulting from catastrophic wildfires created by these entities;

(2) From public utilities other than electric utilities and private landowners that are in all cases eligible to participate in the fund, an amount determined by the administrator based on an actuarial assessment of the risk of potential payments by the fund resulting from catastrophic wildfires created by these entities;

(3) From electric utilities, $ ; provided that there shall be different contribution amounts required by investor-owned utilities and non-investor owned utilities, taking into account the differences in revenues and assets between the ownership models; and

(4) From the State, $ .

(e) The board shall determine the contribution amounts of eligible contributors by ; provided that this date is thirty days before the date by which participants are required to notify the administrator of their intention to participate in the fund. If an eligible contributor declines to notify the administrator that the eligible contributor wishes to participate in the fund and become a contributor, the board shall reduce the total capitalization amount by subtracting the amount the board allocated to that eligible contributor.

(f) If an electric utility, public utility other than an electric utility, other governmental entity, or private property owner elects to become a contributor after the initial capitalization of the fund, the electric utility, public utility other than an electric utility, other governmental entity, or private property owner shall provide, by in the year before the year in which the electric utility, public utility other than an electric utility, other governmental entity, or private property owner seeks to become a contributor, an initial contribution in an amount determined by the board by a majority vote upon the administrator's recommendation, based on an up-to-date consideration of the factors identified in subsection (b), such that the previous and present initial contributions by all contributors reflect their relative contributions to the risk of future payments from the fund.

If necessary to achieve an allocation of initial contributions, and if the election is made before the fifth year of fund operation, the administrator shall reduce the amount of annual contributions by one or more contributors who previously made initial contributions until an allocation is reached. The administrator shall increase the total capitalization amount of the fund by the amount of the initial contribution of the new fund contributor. The administrator may, in the administrator's discretion, permit a new contributor under this subsection to make payments over a five-year period.

(g) Insufficient funding. If the administrator determines that payments made by the fund, and expected future contributions by contributors and investment returns, will result in the fund's: failing to reach the total capitalization amount, as adjusted, as applicable, under subsection (a), by the fifth year; or falling below the total capitalization amount after the fifth year, including, in either case, as a result of the legislature increasing the total capitalization amount, the administrator shall recommend that the board establish a supplemental contribution to be contributed to the fund. Responsibility among contributors for the supplemental contribution shall be allocated as follows:

(1) The administrator shall recommend to the board, and the board shall determine by majority vote, the respective portions of the supplemental contribution amount to be paid by each electric utility, public utility other than an electric utility, other governmental entity, and private property owner contributor, based on an up-to-date assessment of the factors identified in subsection (b); and

(2) The remaining amount of the supplemental contribution shall be paid by the State, subject to legislative appropriation.

(h) The administrator may allow contributors to pay supplemental contributions via annual contributions, or in part via an initial contribution followed by annual contributions, unless the administrator determines that this contribution schedule will create a material risk that the fund will not reach or return to its total capitalization amount within a reasonable period of time to perform the functions identified in this chapter.

(i) If the board establishes a supplemental contribution pursuant to subsection (g), before the fund receives the supplemental contribution, the fund may issue revenue bonds up to the amount of the supplemental contribution, which shall be backed by future contributions to the fund.

(j) The board may order supplemental contributions under this chapter even if an investigation under the replenishment process under section -9 is ongoing. In the event that payments are later made under that replenishment process, the board, provided that other conditions of the refunds section are met pursuant to section -11, may refund supplemental contributions in whole or in part.

(k) Utility contribution. The public utilities commission shall determine a cap on the percentage of a public utility's contributions to the fund, including initial and supplemental contributions, that may be recovered from its customers in rates, unless the commission directs otherwise pursuant section -9.

(l) If the total amount of payments that the administrator determines should be paid in connection with a catastrophic wildfire pursuant to sections -13, -14, and -15 exceeds the current balance of the fund, the State may provide a loan to the fund. The loan shall be repaid over time through annual contributions by contributors.

§ -9 Replenishment of the wildfire relief fund; determination of prudence. (a) If the administrator, or an agency of the State with responsibility for determining the causes of wildfires or catastrophic wildfires informs the public utilities commission that a catastrophic wildfire may have been ignited by the facilities of a public utility that is a contributor, the public utilities commission shall initiate a proceeding to review the public utility's conduct leading to the catastrophic wildfire and make findings. The public utilities commission may, even without formal notice from the administrator or the agency, initiate this proceeding of its own accord.

(b) The public utilities commission shall evaluate the prudence of the conduct of the public utility in connection with a catastrophic wildfire. The public utilities commission shall determine whether the public utility acted prudently, considering only acts that may have caused the ignition and evaluating the public utility's actions in the context of the public utility's overall systems, processes, and programs, such that an error by a public utility employee would not be a basis for a finding of imprudence, unless that error resulted from any imprudent system, process, or program.

(c) In evaluating prudence under this section, the public utilities commission shall determine whether the actions of the public utility were consistent with actions that a reasonable public utility would have undertaken in good faith under similar circumstances, at the relevant point in time, and based on the information available to the public utility at the relevant point in time.

Reasonable conduct shall not be limited to the optimum practice, method, or act to the exclusion of others, but rather shall encompass a spectrum of possible practices, methods, or acts consistent with utility system needs, the interest of ratepayers, and the requirements of governmental agencies of competent jurisdiction.

(d) If the public utilities commission determines that imprudent conduct by the public utility caused the catastrophic wildfire, the public utilities commission shall determine whether to order the public utility to reimburse the fund in whole or in part for payments from the fund made in connection with the catastrophic wildfire. In determining the amount of reimbursement, if any, the public utilities commission shall consider the extent and severity of the public utility's imprudence and factors within and beyond the public utility's control that may have led to or exacerbated the costs from the catastrophic wildfire, including but not limited to humidity, temperature, winds, fuel, merged wildfires with independent ignitions, third-party actions that affected the spread of the wildfire, and fire suppression activities.

(e) The public utilities commission shall not order the public utility to reimburse the fund in an amount that exceeds the lesser of:

(1) The costs that the public utilities commission determines were due to the public utility's imprudence; or

(2) Twenty per cent of the public utility's transmission and distribution equity rate base minus the amounts the public utility has reimbursed, or is required to reimburse, the fund during the period of three consecutive calendar years ending on December 31 of the year in which the calculation is being performed.

(f) If the public utilities commission orders the public utility to reimburse the fund, the public utility shall not recover the amount of the reimbursement in rates charged to ratepayers.

(g) If the administrator, or an agency of the State with responsibility for determining the causes of wildfires or catastrophic wildfires concludes that the conduct of an other governmental entity or private property owner that is a contributor may have caused the occurrence or contributed to the severity of a catastrophic wildfire, the administrator shall assess the prudence of the contributor's conduct, applying the same standard of prudence applied to public utilities pursuant to subsection (c).

(h) If the administrator determines that the contributor acted imprudently and that the imprudence caused or contributed to the severity of the catastrophic wildfire, the administrator shall recommend that the board require the contributor to reimburse the fund in whole or in part for payments that the fund made in connection with the catastrophic wildfire, considering the factors set forth in subsection (d), subject to a cap of ten per cent of the contributor's assets within Hawaii, measured over a rolling three-year period.

§ -10 Failure to make contributions to wildfire relief fund. (a) Contributors shall notify the administrator if they will make, or fail to make, a required contribution, whether initial, annual, or supplemental, to the fund at least days before the contribution is due.

(b) If a contributor fails to make a required contribution to the fund, that contributor will no longer be a contributor as of the date that the contribution was due. That entity may, however, rejoin the fund under the process for joining the fund after initial capitalization set forth in section -8.

(c) The administrator shall not refund to an entity that fails to make a contribution any previous payments made to the fund. However, the administrator shall credit all previous contributions when determining the amount of payment to be made if a participant rejoins the fund under subsection (b).

§ -11 Refunds. (a) In the event that the total amount in the fund exceeds one hundred twenty per cent of the total capitalization amount, the administrator may recommend that the board authorize refunds to be made to the contributors; provided that the refunds do not deplete the fund below one hundred twenty per cent of the total capitalization amount.

(b) Refunds shall be made in proportion to the total amount contributed by the contributors to the fund as of the date of the refund, excluding any payments made under the replenishment provisions under section -9.

(c) The administrator has no obligation to recommend, and the board has no obligation to authorize, a refund. The board shall make a refund only if it takes into consideration all relevant factors and circumstances and determines that making a refund will be unlikely to result in the fund's falling below one hundred twenty per cent of total capitalization within three years after the refund.

(d) Any contributor may request that the board make a refund whenever the conditions under this section are met.

(e) If the board elects to issue a refund or elects not to do so after receiving a request under subsection (d), the administrator shall issue an order explaining the board's decision.

§ -12 Processing of claims. (a) With the approval of the board, the administrator shall establish and approve procedures for the review, approval, and timely payment of claims for reimbursement from the fund. The procedures may be revised from time to time by the administrator with the approval of the board.

(b) In the event of a catastrophic wildfire within the State, the administrator shall process claims made for compensation against the fund related to the catastrophic wildfire, consistent with the requirements of this chapter.

§ -13 Claims by property owners. (a) To be eligible for compensation from the fund for damage to property from a catastrophic wildfire, a property owner shall not have opted out from participation in the fund before the occurrence of the catastrophic wildfire.

(b) County tax assessors shall include, with each real property tax assessment sent to a property owner in the State, a prominent notice regarding participation in the fund. The notice shall be in a form prescribed by the administrator and shall clearly explain the property owner's right to opt out of participation in the fund by submitting a request to opt out to the administrator within a specific time. A property owner who does not submit a timely request to opt out shall be deemed to participate in the fund as of the deadline for submitting a request to opt out.

(d) To opt out of participation in the fund with regard to property either in areas within the State that have been assigned extreme, high, and moderate wildfire risk classes by , a property owner shall submit documentation of insurance coverage for the property along with the property owner's request to opt out of the fund, and the administrator shall approve the documentation as adequate evidence of insurance for the applicable property.

(e) Following a catastrophic wildfire, to make a claim for compensation from the fund for damage to property from the wildfire, a property owner shall submit to the administrator documentation establishing:

(1) That the catastrophic wildfire damaged the owner's property;

(2) The extent of the losses to the owner's property caused by that catastrophic wildfire; and

(3) Any insurance policy providing coverage for those losses.

(f) Within ninety days after a property owner submits a claim for compensation from the fund, including the documentation required in this section, the administrator shall determine whether the documentation is adequate and, if so, the appropriate amount of the payment to the property owner from the fund. If the administrator determines that the property owner has not submitted sufficient documentation for the administrator to evaluate the claim, the administrator may request additional documentation from the property owner and may set a date by which the additional information shall be provided.

(g) If no insurance policy provides coverage for the losses for which a property owner seeks compensation from the fund, the property owner shall be eligible to receive as compensation from the fund a maximum of $ .

(h) If an insurance policy provides coverage for the losses for which a property owner seeks compensation from the fund, the property owner shall be eligible to receive as compensation from the fund an amount up to the lesser of:

(1) per cent of the amount by which the property owner's losses exceed the amount of insurance coverage for the losses; or

(2) per cent of the property owner's insurance coverage applicable to the losses;

provided that the property owner submits adequate documentation of those losses, as required by this section.

§ -14 Claims by property insurers. (a) To be eligible for compensation from the fund, a property insurer shall have elected to participate in the fund before the annual policy period in which the catastrophic wildfire occurred. The administrator shall establish a process for property insurers to annually submit an election to participate in the fund to the administrator within a specified time.

(b) All property insurers who elect to participate in the fund shall be eligible to receive as compensation from the fund per cent of their total payments for property damage claims in Hawaii as a result of a catastrophic wildfire.

(c) Following a catastrophic wildfire, to make a claim for compensation from the fund based on claims resulting from the wildfire, an eligible property insurer shall submit to the administrator documentation establishing the number, nature, and total value of the insurance claims that the property insurer paid pursuant to its policies for damage resulting from the catastrophic wildfire as well as documentation sufficient to assess the reasonableness of the property insurer's payment of the claims.

(d) After receipt of a property insurer's claim for compensation from the fund, including the documentation required in this section, the administrator shall:

(1) Review via an expedited procedure the property insurer's claim for compensation from the fund; and

(2) Determine:

(A) Whether the documentation provided is adequate; and

(B) The appropriate amount of the payment to the property insurer from the fund.

§ -15 Claims by the State and other governmental entities. (a) The State may submit claims for compensation from the fund for damages it incurred resulting from a catastrophic wildfire, including damage to infrastructure or other property, costs of fire suppression, and natural resource damages, to the extent recovery of the losses is authorized by law.

(b) Other governmental entities may submit claims for compensation from the fund for damages they incurred resulting from a catastrophic wildfire, including damage to infrastructure or other property and other losses, to the extent recovery of the losses is authorized by law; provided that to be eligible for compensation from the fund related to a catastrophic wildfire, the other governmental entity shall elect to be a contributor and shall have satisfied contribution obligations pursuant to section ‑8 before the occurrence of the catastrophic wildfire.

(c) To make a claim under this section, the State or other governmental entity shall submit to the administrator documentation establishing:

(1) That the catastrophic wildfire caused the damages;

(2) The extent of the damages caused by the catastrophic wildfire; and

(3) Any other documentation necessary to establish the State's or other governmental entity's right to recover the losses pursuant to law.

(d) After receipt of a claim for compensation from the fund pursuant to this section, the administrator shall determine whether the State or other governmental entity is authorized to recover damages under applicable law and, if so, the appropriate amount of the payment.

§ -16 Fund depletion. (a) Within thirty days of a catastrophic wildfire, the administrator shall assess whether the total payments that the fund is projected to make to eligible property owners, property insurers, the State and other governmental entities under sections ‑13, -14, and -15, respectively, are expected to exceed seventy-five per cent of the total available money in the fund. The board shall adopt rules pursuant to chapter 91 regarding the performance of this assessment.

(b) If the administrator assesses pursuant to subsection (a) that the total payments that the fund is projected to make to eligible property owners, property insurers, the State and other governmental entities under sections -13, -14, and -15, respectively, are expected to exceed seventy-five per cent of the total available money remaining in the fund, the administrator shall seek to increase the total amount of money in the fund using all available methods under this chapter.

(c) Depletion event. If the administrator is unable, despite taking the steps under subsection (b), to secure sufficient additional funding for the fund, including credible pledges for future funding, to reverse the administrator's assessment under subsection (b) within forty-five days, the administrator shall declare the existence of a depletion event.

(d) Depletion percentage. If the administrator declares the existence of a depletion event, the administrator shall determine what percentage of total eligible payments the fund can make without the likelihood that the payments will exceed seventy-five per cent of the total available money in the fund. This percentage shall be deemed the depletion percentage.

(e) Depletion payment. The administrator shall thereafter offer all property owners, property insurers, and the State and other governmental entities that submit claims for compensation from the fund and would otherwise, under sections -13, -14, and -15, respectively, be entitled to a particular payment amount, that amount multiplied by the depletion percentage. This amount shall be deemed the depletion payment.

(f) All claimants that are offered the depletion payment may choose to accept or decline the payment. Any property owner or property insurer, other than a contributor, that declines to accept the depletion payment shall:

(1) Be ineligible for any payments by the fund with respect to the catastrophic wildfire for which the claim was made; and

(2) Not be bound by the limitation on claims under section -18 with respect to only that catastrophic wildfire.

(g) After the payments to all claimants who accepted the depletion payment have been made, the administrator may recommend to the board, and the board may decide, in its discretion, to make a further payment to all claimants who accepted the depletion payment. The board shall adopt rules pursuant to chapter 91 for the making of this decision.

(h) Multiple catastrophic events. The board shall adopt rules pursuant to chapter 91 regarding how to pay claims in the event that one or more catastrophic wildfires occur while the corporation is in the process of assessing, receiving, determining, or paying claims from an earlier catastrophic wildfire.

§ -17 Hearings and appeals of determinations. (a) Within thirty days after the administrator's determination of the amount of payment due to any claimant from the fund pursuant to sections -13, -14, and -15, respectively, or the board's determination of a contributor's allocation for any contribution, the affected person or entity may request a contested case hearing on that determination before the department of commerce and consumer affairs pursuant to chapter 91.

(b) Upon receipt of a request for a hearing on the administrator or board's determination, the office of administrative hearings shall schedule a hearing date no later than days after its receipt of the request for a hearing.

(c) Following the conclusion of any hearing or before the conclusion of the hearing, with the concurrence of the parties, the office of administrative hearings shall promptly, and no later than days after the hearing, decide the matter and issue findings of fact, conclusions of law, and a decision in accordance with the hearings officer's determination.

(d) Within days after the date on which a copy of the office of administrative hearings' order is mailed to the parties, a party may seek judicial review of the order by filing a petition for review in the applicable circuit court, with a right of appeal as allowed by law. If no petition is timely filed, the order of the office of administrative hearings shall be final.

§ -18 Limitations on claims. (a) No suit, claim, or other civil legal action may be instituted or maintained against contributors or their affiliates, employees, agents, or insurers:

(1) For recovery of losses or damages of a type for which compensation may be sought from the fund; and

(2) By persons or entities:

(A) Who are contributors, property owners who do not opt out of the fund, or property insurers who elect to participate in the fund; or

(B) Who seek indemnity or contribution for amounts paid, or that may be paid, to contributors, property owners who do not opt out of the fund, or property insurers who elect to participate in the fund.

(b) Persons or entities who are eligible to seek compensation from the fund for property damage arising from a catastrophic wildfire may not seek to recover for damage from electric utilities, public utilities other than electric utilities, the State, or private property owners who are contributors, notwithstanding that the claimed property damage may exceed the amount of payment by the fund for the damage.

(c) The fund shall be subrogated to the rights of the contributors, property owners who do not opt out of the fund, and property insurers who elect to participate in the fund, to the extent of any payment made by the fund to those persons or entities and may pursue claims against a person or an entity that is not a contributor for damages resulting from the catastrophic wildfire."

SECTION 3. Section 76-16, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) The civil service to which this chapter applies shall comprise all positions in the State now existing or hereafter established and embrace all personal services performed for the State, except the following:

(1) Commissioned and enlisted personnel of the Hawaii National Guard as such, and positions in the Hawaii National Guard that are required by state or federal laws or regulations or orders of the National Guard to be filled from those commissioned or enlisted personnel;

(2) Positions filled by persons employed by contract where the director of human resources development has certified that the service is special or unique or is essential to the public interest and that, because of circumstances surrounding its fulfillment, personnel to perform the service cannot be obtained through normal civil service recruitment procedures. Any such contract may be for any period not exceeding one year;

(3) Positions that must be filled without delay to comply with a court order or decree if the director determines that recruitment through normal recruitment civil service procedures would result in delay or noncompliance, such as the Felix-Cayetano consent decree;

(4) Positions filled by the legislature or by either house or any committee thereof;

(5) Employees in the office of the governor and office of the lieutenant governor, and household employees at Washington Place;

(6) Positions filled by popular vote;

(7) Department heads, officers, and members of any board, commission, or other state agency whose appointments are made by the governor or are required by law to be confirmed by the senate;

(8) Judges, referees, receivers, masters, jurors, notaries public, land court examiners, court commissioners, and attorneys appointed by a state court for a special temporary service;

(9) One bailiff for the chief justice of the supreme court who shall have the powers and duties of a court officer and bailiff under section 606-14; one secretary or clerk for each justice of the supreme court, each judge of the intermediate appellate court, and each judge of the circuit court; one secretary for the judicial council; one deputy administrative director of the courts; three law clerks for the chief justice of the supreme court, two law clerks for each associate justice of the supreme court and each judge of the intermediate appellate court, one law clerk for each judge of the circuit court, two additional law clerks for the civil administrative judge of the circuit court of the first circuit, two additional law clerks for the criminal administrative judge of the circuit court of the first circuit, one additional law clerk for the senior judge of the family court of the first circuit, two additional law clerks for the civil motions judge of the circuit court of the first circuit, two additional law clerks for the criminal motions judge of the circuit court of the first circuit, and two law clerks for the administrative judge of the district court of the first circuit; and one private secretary for the administrative director of the courts, the deputy administrative director of the courts, each department head, each deputy or first assistant, and each additional deputy, or assistant deputy, or assistant defined in paragraph (16);

(10) First deputy and deputy attorneys general, the administrative services manager of the department of the attorney general, one secretary for the administrative services manager, an administrator and any support staff for the criminal and juvenile justice resources coordination functions, and law clerks;

(11) (A) Teachers, principals, vice-principals, complex area superintendents, deputy and assistant superintendents, other certificated personnel, and no more than twenty noncertificated administrative, professional, and technical personnel not engaged in instructional work;

(B) Effective July 1, 2003, teaching assistants, educational assistants, bilingual/bicultural school-home assistants, school psychologists, psychological examiners, speech pathologists, athletic health care trainers, alternative school work study assistants, alternative school educational/supportive services specialists, alternative school project coordinators, and communications aides in the department of education;

(D) Members of the faculty of the University of Hawaii, including research workers, extension agents, personnel engaged in instructional work, and administrative, professional, and technical personnel of the university;

(12) Employees engaged in special, research, or demonstration projects approved by the governor;

(13) (A) Positions filled by inmates, patients of state institutions, and persons with severe physical or mental disabilities participating in the work experience training programs;

(B) Positions filled with students in accordance with guidelines for established state employment programs; and

(C) Positions that provide work experience training or temporary public service employment that are filled by persons entering the workforce or persons transitioning into other careers under programs such as the federal Workforce Investment Act of 1998, as amended, or the Senior Community Service Employment Program of the Employment and Training Administration of the United States Department of Labor, or under other similar state programs;

(14) A custodian or guide at Iolani Palace, the Royal Mausoleum, and Hulihee Palace;

(15) Positions filled by persons employed on a fee, contract, or piecework basis, who may lawfully perform their duties concurrently with their private business or profession or other private employment and whose duties require only a portion of their time, if it is impracticable to ascertain or anticipate the portion of time to be devoted to the service of the State;

(16) Positions of first deputies or first assistants of each department head appointed under or in the manner provided in section 6, article V, of the Hawaii State Constitution; three additional deputies or assistants either in charge of the highways, harbors, and airports divisions or other functions within the department of transportation as may be assigned by the director of transportation, with the approval of the governor; one additional deputy in the department of human services either in charge of welfare or other functions within the department as may be assigned by the director of human services; four additional deputies in the department of health, each in charge of one of the following: behavioral health, environmental health, hospitals, and health resources administration, including other functions within the department as may be assigned by the director of health, with the approval of the governor; two additional deputies in charge of the law enforcement programs, administration, or other functions within the department of law enforcement as may be assigned by the director of law enforcement, with the approval of the governor; three additional deputies each in charge of the correctional institutions, rehabilitation services and programs, and administration or other functions within the department of corrections and rehabilitation as may be assigned by the director [or] of corrections and rehabilitation, with the approval of the governor; an administrative assistant to the state librarian; and an administrative assistant to the superintendent of education;

(17) Positions specifically exempted from this part by any other law; provided that:

(A) Any exemption created after July 1, 2014, shall expire three years after its enactment unless affirmatively extended by an act of the legislature; and

(B) All of the positions defined by paragraph (9) shall be included in the position classification plan;

(18) Positions in the state foster grandparent program and positions for temporary employment of senior citizens in occupations in which there is a severe personnel shortage or in special projects;

(19) Household employees at the official residence of the president of the University of Hawaii;

(20) Employees in the department of education engaged in the supervision of students during meal periods in the distribution, collection, and counting of meal tickets, and in the cleaning of classrooms after school hours on a less than half-time basis;

(21) Employees hired under the tenant hire program of the Hawaii public housing authority; provided that [~~not~~] no more than twenty-six per cent of the authority's workforce in any housing project maintained or operated by the authority shall be hired under the tenant hire program;

(22) Positions of the federally funded expanded food and nutrition program of the University of Hawaii that require the hiring of nutrition program assistants who live in the areas they serve;

(23) Positions filled by persons with severe disabilities who are certified by the state vocational rehabilitation office that they are able to perform safely the duties of the positions;

(24) The sheriff;

(25) A gender and other fairness coordinator hired by the judiciary;

(26) Positions in the Hawaii National Guard youth and adult education programs;

(27) In the Hawaii state energy office in the department of business, economic development, and tourism, all energy program managers, energy program specialists, energy program assistants, and energy analysts;

(28) Administrative appeals hearing officers in the department of human services;

(29) In the Med-QUEST division of the department of human services, the division administrator, finance officer, health care services branch administrator, medical director, and clinical standards administrator;

(30) In the director's office of the department of human services, the enterprise officer, information security and privacy compliance officer, security and privacy compliance engineer, security and privacy compliance analyst, information technology implementation manager, assistant information technology implementation manager, resource manager, community/project development director, policy director, special assistant to the director, and limited English proficiency project manager/coordinator;

(31) The Alzheimer's disease and related dementia services coordinator in the executive office on aging;

(32) In the Hawaii emergency management agency, the executive officer, public information officer, civil defense administrative officer, branch chiefs, and emergency operations center state warning point personnel; provided that for state warning point personnel, the director shall determine that recruitment through normal civil service recruitment procedures would result in delay or noncompliance;

(33) The executive director and seven full-time administrative positions of the school facilities authority;

(34) Positions in the Mauna Kea stewardship and oversight authority;

(35) In the office of homeland security of the department of law enforcement, the statewide interoperable communications coordinator; [~~and~~]

(36) In the social services division of the department of human services, the business technology analyst[.]; and

(37) The administrator of the wildfire relief fund corporation.

The director shall determine the applicability of this section to specific positions.

Nothing in this section shall be deemed to affect the civil service status of any incumbent as it existed on July 1, 1955."

SECTION 4. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2024-2025 for deposit into the wildfire relief fund.

SECTION 5. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2024-2025 for the establishment of full-time equivalent ( FTE) administrator position, who shall be exempt from chapter 76, Hawaii Revised Statutes, to support the Hawaii wildfire relief fund corporation; provided that in all subsequent fiscal years, all funding for the administrator position shall be paid from the wildfire relief fund.

The sum appropriated shall be expended by the department of commerce and consumer affairs for the purposes of this Act.

SECTION 6. In accordance with section 9 of article VII of the Hawaii State Constitution and sections 37‑91 and 37‑93, Hawaii Revised Statutes, the legislature has determined that the appropriations contained in H.B. No. , will cause the state general fund expenditure ceiling for fiscal year 2024‑2025 to be exceeded by $ or per cent. In addition, the appropriation contained in this Act will cause the general fund expenditure ceiling for fiscal year 2024‑2025 to be further exceeded by $ or per cent. The combined total amount of general fund appropriations contained in only these two Acts will cause the state general fund expenditure ceiling for fiscal year 2024‑2025 to be exceeded by $ or per cent. The reasons for exceeding the general fund expenditure ceiling are that:

(1) The appropriation made in this Act is necessary to serve the public interest; and

(2) The appropriation made in this Act meets the needs addressed by this Act.

PART II

SECTION 7. The legislature finds that the risk of catastrophic wildfires has increased, making it imperative that electric utilities develop, implement, and administer effective plans for wildfire risk mitigation. Electric utilities should develop, implement, and administer wildfire protection plans, and, through a public process, the public utilities commission should review and approve such plans and the recovery of any related costs to implement the plans.

The legislature also finds that a resilience working group, convened throughout 2019 and 2020, sought to:

(1) Identify and prioritize resilience threat scenarios and potential grid impacts;

(2) Identify key customer and infrastructure sector capabilities and needs following a severe event and loss of power;

(3) Identify gaps and priorities in grid and customer capabilities following a severe event and loss of power;

(4) Provide recommendations and inputs for investor-owned utility grid planning to address resilience needs; and

(5) Recommend additional grid and customer actions to close gaps and capabilities following severe events.

The resilience working group identified wildfires as one of five types of severe events of utmost importance to consider for achieving a resilient grid and provided resilience options for utilities to consider.

The legislature further finds that securitization may be the most efficient, least-cost way to finance wildfire risk mitigation costs and expenses. Utility rate securitization transactions have an extensive track record of success. Bonds securitized by the right to recover rates receive investment grade credit ratings from credit rating agencies and thus provide a means of securing capital at a lower interest rate than those currently available to utilities, in particular utilities without an investment grade credit rating.

The purpose of this part is to create a process whereby electric utilities develop and submit effective risk-based wildfire risk protection plans to the public utilities commission for approval; the public utilities commission evaluates those plans and either approves them or does so with modifications; the electric utilities are able to timely recover the prudently incurred costs and expenses of developing, implementing, and administrating those plans; and those costs and expenses are not borne disproportionately by any particular ratepayer or county.

SECTION 8. Chapter 269, Hawaii Revised Statutes, is amended by adding a new part to be appropriately designated and to read as follows:

"PART . WILDFIRE PROTECTION AND MITIGATION

§269-A Definitions. As used in this part:

"Ancillary agreement" means a bond insurance policy, letter of credit, reserve account, surety bond, swap arrangement, hedging arrangement, liquidity or credit support arrangement, or other similar agreement or arrangement entered into in connection with the issuance of bonds that is designed to promote the credit quality and marketability of the bonds or to mitigate the risk of an increase in interest rates.

"Assignee" means a legally recognized entity:

(1) To which an electric utility company assigns, sells, or transfers, other than as security, all or a portion of its interest in or right to wildfire protection property; or

(2) Who acquires, by way of assignment or otherwise, all or a portion of the wildfire protection property following the exercise of remedies upon a default under the terms of the bonds.

"Assignee" includes a corporation, limited liability company, general partnership or limited partnership, public authority, trust, financing entity, or any entity to which an assignee assigns, sells, or transfers, other than as security, its interest in or right to wildfire protection property.

"Bond" means any bond, note, certificate of participation or beneficial interest, or other evidence of indebtedness or ownership that is issued by the financing entity under a financing order, the proceeds of which are used to recover, finance, or refinance any wildfire protection costs, and that are secured by or payable from wildfire protection property.

"Catastrophic wildfire" means any wildfire in the State that damaged or destroyed more than five hundred commercial buildings or residential structures designed for habitation.

"Commission" means the public utilities commission.

"Consumer" means any individual, governmental body, trust, business entity, or nonprofit organization that consumes electricity that has been transmitted or distributed by means of electric transmission or distribution facilities, whether those electric transmission or distribution facilities are owned by the consumer, the electric utility, or any other party.

"Electric utility" means a public utility as defined in section 269-1 that is engaged in the production, transmission, or distribution of electricity.

"Financing costs" means the costs to issue, service, repay, or refinance bonds, whether incurred or paid upon issuance of the bonds or over the life of the bonds, if they are approved for recovery by the commission in a financing order. "Financing costs" may include any of the following:

(1) Principal, interest, and redemption premiums that are payable on bonds;

(2) A payment required under an ancillary agreement;

(3) An amount required to fund or replenish reserve accounts or other accounts established under an indenture, ancillary agreement, or other financing document related to the bonds;

(4) Taxes, franchise fees, or license fees imposed on a financing entity as a result of the issuance of the financing order, the assignment, sale or transfer of any wildfire property or the sale of the bonds or imposed on the wildfire protection charges, or otherwise resulting from the collection of the charges, in any such case whether paid, payable, or accrued;

(5) Costs related to issuing and servicing bonds or the application for a financing order, including without limitation servicing fees and expenses, trustee fees and expenses, legal fees and expenses, accounting fees, administrative fees, underwriting and placement fees, financial advisory fees, original issue discount, capitalized interest, rating agency fees, and any other related costs that are approved for recovery in the financing order; and

(6) Other costs as specifically authorized by a financing order.

"Financing entity" means an electric utility and an entity to which an electric utility or an affiliate of an electric utility sells, assigns or pledges all or a portion of the electric utility's or its affiliate's interest in wildfire protection property, including an affiliate of the electric utility or any unaffiliated entity, in each case as approved by the commission in a financing order.

For this purpose, and subject to section 269-D(c), an entity to which an electric utility or its affiliate sells, assigns or pledges all or a portion of the electric utility's interest in wildfire protection property may include any governmental entity that is able to issue bonds that are exempt from federal tax pursuant to section 103 of the Internal Revenue Code of 1986, including the State or a political subdivision thereof or any department, agency or instrumentality of the foregoing; provided that the bonds issued thereby shall not constitute a debt or liability of the State or any political subdivision thereof or any department, agency or instrumentality thereof and shall not constitute a pledge of the full faith and credit of the entity or of the State or any political subdivision thereof, but shall be payable solely from the funds provided under this chapter.

"Financing order" means an order of the commission under this part that has become final as provided by law, and that authorizes the issuance of bonds and the imposition, adjustment from time to time, and collection of wildfire protection charges. "Financing order" includes without limitation a procedure to require the expeditious approval by the commission of periodic adjustments to wildfire protection charges and any associated fixed recovery tax amounts included in that financing order to ensure recovery of all wildfire protection costs and the costs associated with the proposed recovery, financing, or refinancing thereof, including the costs of servicing and retiring the bonds contemplated by the financing order.

"Financing party" means any holder of bonds, any party to or beneficiary of an ancillary agreement, and any trustee, collateral agent, or other person acting for the benefit of any of the foregoing.

"Fixed recovery tax amounts" means those nonbypassable rates and other charges, including but not limited to distribution, connection, disconnection, and termination rates and charges, that are needed to recover federal and state taxes associated with wildfire protection charges authorized by the commission in a financing order, but are not approved as financing costs financed from proceeds of bonds.

"True-up adjustment" means a formulaic adjustment to the wildfire protection charges as they appear on consumer bills that is necessary to correct for any overcollection or undercollection of the wildfire protection charges authorized by a financing order and to otherwise ensure the timely and complete payment and recovery of wildfire protection costs over the authorized repayment term.

"Wildfire protection charges" means the nonbypassable charges authorized by section 269-F and in a financing order authorized under this part to be imposed on and collected from all existing and future consumers to recover both of the following:

(1) Wildfire protection costs specified in the financing order; and

(2) The costs of recovering, financing, or refinancing wildfire protection costs through a plan approved by the commission in the financing order, including the costs of issuing, servicing and retiring bonds.

"Wildfire protection costs" means any capital costs and operation and maintenance expenses related to the development, implementation, and administration of a wildfire protection plan prepared pursuant to section 269-C(a), but, for the avoidance of doubt, shall not include any amounts, including, without limitation, fees, costs, and awards, payable in connection with any legal claims made in any way related to any wildfire. "Wildfire protection costs" does not include any penalties levied against an electric utility pursuant to section 269-D. "Wildfire protection costs" may also include any of the following:

(1) Catastrophic wildfire costs or expenses, other than amounts, for the avoidance of doubt, payable in connection with any legal claims made in any way related to any wildfire, that the commission has determined were prudently incurred, including but not limited to costs or expenses that have been paid that the electric utility has a legal obligation to pay or that the electric utility would be otherwise obligated to pay;

(2) Federal and state taxes associated with recovery of the amounts pursuant to paragraph (1);

(3) Financing costs; and

(4) Professional fees, consultant fees, redemption premiums, tender premiums, and other costs incurred by the electric utility in using proceeds of bonds to acquire outstanding securities of the electric utility, as authorized by the commission in a financing order.

"Wildfire protection plan" means the risk-based wildfire protection plan mandated by section 269-C(a) and approved by the commission.

"Wildfire protection property" means the property right created pursuant to this part, including without limitation the right, title, and interest of the public utility, financing entity, or its assignee:

(1) In and to the wildfire protection charge established pursuant to a financing order, including the right to impose, bill, collect, and receive fixed recovery charges under the financing order and all rights to obtain adjustments to the wildfire protection charge in accordance with section 269-F and the financing order; and

(2) To be paid the amount that is determined in a financing order to be the amount that the public utility or its assignee is lawfully entitled to receive pursuant to this part and the proceeds thereof, and in and to all revenues, collections, claims, payments, moneys, or proceeds of, or arising from, the wildfire protection charge that is the subject of a financing order.

"Wildfire protection property" does not include a right to be paid fixed recovery tax amounts. "Wildfire protection property" shall constitute a current property right, notwithstanding the fact that the value of the property right will depend on consumers using electricity or, in those instances where consumers are customers of the public utility, the public utility performing certain services.

§269-B Electric utility workshops. The commission may periodically convene workshops to help electric utilities develop and share information for the identification, adoption, and implementation of best practices regarding wildfires, including but not limited to risk-based wildfire protection and risk-based wildfire mitigation procedures and standards. The best practices discussed in these workshops may be incorporated into the proposed wildfire protection plans and updates submitted for the approval of the commission pursuant to section 269-C.

§269-C Wildfire protection plans. (a) Each electric utility shall have and operate in compliance with a risk-based wildfire protection plan, which shall be submitted to the commission for approval. The risk-based wildfire protection plan shall be based on reasonable and prudent practices that may be determined by commission standards adopted by decision or rule. The electric utility shall design the risk-based wildfire protection plan to protect public safety, reduce risk to electric utility customers, and promote resilience of the Hawaii electric system to wildfire damage. Each electric utility's wildfire protection plan shall, at a minimum:

(1) Account for the responsibilities of persons responsible for executing the plan;

(2) Describe the objectives of the plan;

(3) Identify areas that are subject to a heightened risk of wildfire and are:

(A) Within the right of way or legal control or ownership of the electric utility; and

(B) Outside the right of way or legal control or ownership of the electric utility but within a reasonable distance, as determined by the commission, of the electric utility's generation or transmission assets;

(4) Identify a means for mitigating wildfire risk that reflects a reasonable balancing of mitigation costs with the resulting reduction of wildfire risk;

(5) Identify preventive actions and programs that the electric utility shall carry out to minimize the risk of electric utility facilities causing wildfire;

(6) Identify the metrics the electric utility plans to use to evaluate the plan's performance and the assumptions that underlie the use of those metrics;

(7) Describe how the application of previously identified metrics to previous plan performances has informed the plan;

(8) After seeking information from state and local entities, identify a protocol for the deenergizing of power lines and adjusting of power system operations to mitigate wildfires, promote the safety of the public and first responders, and preserve health and communication infrastructure;

(9) Describe appropriate and feasible procedures for notifying a customer who may be impacted by the deenergizing of electrical lines. The procedures shall consider the need to notify, as a priority, critical first responders, health care facilities, operators of wastewater and water delivery infrastructure, and operators of telecommunications infrastructure;

(10) Describe the procedures, standards, and time frames that the electric utility shall use to inspect electric utility infrastructure in areas that the electric utility identifies under paragraph (3), including whether those procedures, standards, and time-frames are already set forth in the electric utility's existing plans or protocols and in coordination with any relevant entities;

(11) Describe the procedures, standards, and time frames that the electric utility will use to carry out vegetation management in areas that the electric utility identifies under paragraph (3), including whether those procedures, standards, and time frames are already set forth in the electric utility's existing plans or protocols and in coordination with any relevant entities;

(12) Include a list that identifies, describes, and prioritizes all wildfire risks, and drivers for those risks, throughout the electric utility's service territory. The list shall include but not be limited to the following:

(A) Risks and risk drivers associated with design, construction, operation, and maintenance of the electric utility's equipment and facilities; and

(B) Particular risks and risk drivers associated with topographic and climatological risk factors throughout the different parts of the electric utility's service territory;

(13) Describe how the plan accounts for the wildfire risk identified in the electric utility's risk assessment;

(14) Describe the actions the electric utility will take to ensure its system will achieve the highest level of safety, reliability, and resiliency, and to ensure that its system is prepared for a wildfire, including hardening and modernizing its infrastructure with improved engineering, system design, standards, equipment, and facilities, including but not limited to undergrounding lines, insulation of distribution wires, and pole replacement;

(15) Demonstrate that the electric utility has an adequately sized and trained workforce to promptly restore service after a wildfire, taking into account employees of other utilities pursuant to mutual aid agreements and employees of entities that have entered into contracts with the electric utility;

(16) Identify the estimated development, implementation, and administration costs for the risk-based wildfire protection plan;

(17) Identify the timelines, as applicable, for development, implementation, and administration of any aspects of the risk-based wildfire protection plan;

(18) Describe how the plan is consistent with the electric utility's other hazard mitigation and grid hardening plans, including plans to prepare for, and to restore service after, a wildfire, including workforce mobilization and prepositioning equipment and employees;

(19) Identify community outreach and public awareness efforts that the electric utility will use before, during, and after a wildfire;

(20) Describe the processes and procedures the electric utility will use to do all of the following:

(A) Monitor and audit the implementation of the plan;

(B) Identify any deficiencies in the plan or the plan's implementation and correct those deficiencies; and

(C) Monitor and audit the effectiveness of electrical line and equipment inspections, including inspections performed by contractors, carried out under the plan and other applicable statutes and rules of the commission;

(21) Demonstrate elements of data governance, including enterprise systems; and

(22) Any modifications to paragraphs (1) through (21), or other information as required by the commission.

(b) Each electric utility shall regularly submit updates to its risk-based wildfire protection plan for approval on a schedule determined by the commission.

(c) To develop the risk-based wildfire protection plan, the electric utility may consult with and consider information from federal, state, local, and other expert entities.

(d) The commission shall evaluate each electric utility's risk-based wildfire protection plan and plan updates according to the commission's rules of practice and procedure in chapter 16-601, Hawaii Administrative Rules. The commission shall authorize the department of land and natural resources and local emergency services agencies to participate in proceedings evaluating risk-based wildfire protection plans.

(e) Not more than ninety days after the last party filing, and not more than a total of one hundred twenty days after the initial application for approval of the submitted risk-based wildfire protection plan or update in the docketed proceeding, the commission shall approve, approve with conditions, or reject the plan or update based on whether the commission finds that the plan or update is based on reasonable and prudent practices and designed to meet all applicable rules and standards adopted by the commission. The commission may, in approving the plan or update with conditions, direct the electric utility to make modifications to the plan or updates that the commission believes represent a reasonable balancing of mitigation costs with the resulting reduction of wildfire risk based on the evidentiary record in the proceeding. The commission shall issue a decision explaining its determination, including findings of fact and conclusions of law, in accordance with chapter 91.

(f) The electric utility shall track the costs that it actually incurs to develop, implement, and administer the risk-based wildfire protection plan. In the electric utility's risk-based wildfire protection plan update, the electric utility shall report on the costs as actually incurred for the most recent past period for which the information is available.

If the actual costs are less than the amounts that the commission determined were reasonable in its decision under subsection (e), the commission shall direct the electric utility to refund or credit the costs to consumers; provided that any such refund or credit to consumers shall not affect, alter, or impair the value of the wildfire protection property, wildfire protection charges, or any bonds secured by wildfire protection property.

If the actual costs are equal to or greater than the amounts that the commission determined were reasonable in its decision under subsection (e), the commission shall not direct the electric utility to refund to ratepayers the amount the commission previously determined was reasonable and shall limit its review to any additional costs, which it shall allow the electric utility to recover from ratepayers if the commission finds the costs unreasonable.

(g) The commission's approval of a risk-based wildfire protection plan does not by itself establish a defense to any enforcement action for violation of a commission decision, order, or rule.

(h) The commission shall, as appropriate, adopt rules or issue orders for the implementation of this section. The rules or orders may include but need not be limited to procedures and standards regarding data governance, risk-based decision-making, vegetation management, public power safety shutoffs and restorations, pole materials, circuitry, and monitoring systems.

(i) In its decision pursuant to subsection (e), the commission shall determine the reasonable costs to develop, implement, and administer the plan and shall authorize the electric utility to recover the costs in rates. The commission shall establish a method to authorize timely and prompt recovery of the wildfire protection costs. The commission shall establish rules for the electric utility to track actual wildfire protection costs and for the commission to authorize, as applicable, refunds or credits to ratepayers where actual wildfire protection costs are ultimately less than those the commission determined reasonable and authorized for rate recovery; provided that any such refund or credit to consumers shall not affect, alter, or impair the value of the wildfire protection property, wildfire protection charges, or any bonds secured by wildfire protection property. To the degree actual wildfire protection costs exceed those the commission determined were reasonable and authorized for rate recovery, the commission shall authorize cost recovery in the event that it determines those additional wildfire protection costs are just and reasonable. The method established may include the issuance of bonds under section 269-D.

(j) Unless an electric utility acts in a manner that constitutes willful misconduct, bad faith, or reckless disregard of its obligations, in each case, in compliance with its obligations under a financing order and any applicable wildfire protection plan, no electric utility shall be civilly liable for the death of or injury to persons, or property damage, as a result of:

(1) Any act taken in accordance with a plan or updated plan approved by the commission under this part; or

(2) Any failure to take an action proposed by an electric utility in a plan or updated plan and thereafter removed from the plan by modification of the commission.

(k) There shall be no liability on the part of, and no cause of action of any nature shall arise against, the commission or its agents and employees, the State, the commission commissioners, or the commissioners' representatives for the death of or injury to persons, or property damage, for any action taken by such in the performance of their powers and duties under this part.

(l) Any determination by the commission that the electric utility materially failed to comply with an approved plan or part of an approved plan, and any imposition of a civil penalty, shall be inadmissible in any lawsuit or other action against the electric utility seeking compensation for the alleged death of or injury to persons, or property damage. In any action seeking to hold an electric utility civilly liable for the death of or injury to persons, or property damage, no inference of liability may be drawn solely based on a failure by the electric utility to adhere to the requirements of an approved plan.

§269-D Applications to issue bonds and authorize wildfire protection charges. (a) An electric utility may apply to the commission for one or more financing orders to issue bonds to recover any wildfire protection costs, each of which authorizes the following:

(1) The imposition, charging, and collection of a wildfire protection charge, to become effective upon the issuance of the bonds, and an adjustment of any such wildfire protection charge in accordance with a true-up adjustment mechanism under this part in amounts sufficient to pay the principal of and interest on the bonds and all other associated financing costs on a timely basis;

(2) The creation of wildfire protection property under the financing order; and

(3) The imposition, charging, and collection of fixed recovery tax amounts to recover any portion of the public utility's federal and state taxes associated with those wildfire protection charges and not financed from the proceeds of bonds.

(b) The application shall include all of the following:

(1) The wildfire protection costs to be financed through the issuance of bonds;

(2) The principal amount of the bonds proposed to be issued;

(3) An estimate of the date each series of bonds is expected to be issued;

(4) The scheduled final payment date, not to exceed thirty years, and a legal final maturity date, which may be longer, subject to rating agency and market considerations, during which term the wildfire protection charge associated with the issuance of each series of bonds is expected to be imposed and collected;

(5) An estimate of the financing costs associated with the issuance of each series of bonds;

(6) An estimate of the amount of the wildfire protection charge revenues necessary to pay principal and interest on the bonds and all other associated financing costs as set forth in the application and the calculation for that estimate;

(7) A proposed design of the wildfire protection charge and the methodology for allocating the wildfire protection charge among consumer classes within the electric utility's service territory;

(8) A description of the financing entity selected by the electric utility;

(9) A description of a proposed true-up mechanism for the adjustment of the wildfire protection charge to correct for any overcollection or undercollection of the wildfire protection charge, and to otherwise ensure the timely payment of principal and interest on the bonds and all associated financing costs; and

(10) Any other information required by the commission.

(c) At the option of the electric utility, the electric utility may include in its application for a financing order a request for authorization to sell, transfer, assign, or pledge wildfire protection property to a governmental financing entity if it expects bonds issued by a governmental financing entity would result in a more cost efficient means, taking into account all financing costs related to such bonds, than using another financing entity to issue bonds to finance the same wildfire protection costs, taking into account the costs of issuing such other financing entity's bonds. If a public utility exercises such option, the commission may hire a financial advisor in connection with its review, upon which it may rely.

(d) The commission shall issue an approval or denial of any application for a financing order filed pursuant to this section within one hundred twenty days of the filing of the application.

(e) In exercising its duties under this section, the commission shall consider:

(1) Whether the wildfire protection costs to be financed by any bonds to be issued are just and reasonable;

(2) Whether the costs are consistent with the public interest;

(3) Whether the structuring, marketing, and pricing of the bonds are expected to result in the lowest wildfire protection charges consistent with market conditions at the time the bonds are priced and the terms of the financing order;

(4) Whether the terms and conditions of any bonds to be issued are just and reasonable; and

(5) Whether the issuance of the bonds would be beneficial, including by avoiding or significantly mitigating abrupt and significant increases in rates to consumers for the applicable time period in the absence of the bonds.

(f) Wildfire protection charges shall be imposed only on existing and future consumers within the utility service territory who shall continue to pay wildfire protection charges until the bonds and associated financing costs are paid in full by the financing entity or, in the event the wildfire protection property has been assigned to an assignee in connection with the exercise of remedies upon a default under the terms of the bonds, until the receipt of proceeds by such assignee in an amount sufficient to repay the principal amount of, and interest that would have accrued on, the bonds had they remained outstanding.

§269-E Wildfire protection plan financing order. (a) A financing order shall remain in effect until the bonds issued under the financing order and all financing costs related to the bonds have been paid in full or defeased by their terms or, in the event the wildfire protection property has been assigned to an assignee in connection with the exercise of remedies upon a default under the terms of the bonds, until the receipt of proceeds by such assignee in an amount sufficient to repay principal and interest on the bonds that would have accrued had they remained outstanding. A financing order shall remain in effect and unabated notwithstanding the bankruptcy, reorganization, or insolvency of the electric utility or the commencement of any judicial or nonjudicial proceeding on the financing order.

(b) Notwithstanding any other law, and except as otherwise provided in section 269-C(e), with respect to wildfire protection property that has been made the basis for the issuance of bonds and with respect to any associated fixed recovery tax amounts, the financing order, the wildfire protection charges, and any associated fixed recovery tax amounts shall be irrevocable. The State and its agencies, including the commission, pledge and agree with bondholders, the owners and assignees of the wildfire protection property, and other financing parties that the State and its agencies will not take any action listed in this subsection. This subsection does not preclude limitation or alteration if full compensation is made by law for the full protection of the wildfire protection property collected pursuant to a financing order and of the bondholders and any assignee or financing party entering into a contract with the electric utility. The following actions shall be prohibited:

(1) Altering the provisions of this part that authorize the commission to create an irrevocable contract right or choosing in action by the issuance of a financing order, to create wildfire protection property, and make the wildfire protection charges imposed by a financing order irrevocable, binding, nonbypassable charges for all existing and future consumers;

(2) Taking or permitting any action that impairs or would impair the value of wildfire protection property or the security for the bonds or revises the wildfire protection costs for which recovery is authorized;

(3) In any way impairing the rights and remedies of the bondholders, assignees, and other financing parties;

(4) Except for changes made pursuant to the formula-based true-up mechanism authorized under subsection (d), reducing, altering, or impairing wildfire protection charges that are to be imposed, billed, charged, collected, and remitted for the benefit of the bondholders, any assignee, and any other financing parties until any and all principal, interest, premium, financing costs and other fees, expenses, or charges incurred, and any contracts to be performed, in connection with the related bonds have been paid and performed in full or, in the event the wildfire protection property has been assigned to an assignee in connection with the exercise of remedies upon a default under the terms of the bonds, until the receipt of proceeds by such assignee in an amount sufficient to repay principal and interest on the bonds that would have accrued had they remained outstanding.

The financing entity is authorized to include this pledge in the bonds.

(c) Under a final financing order, the electric utility shall retain sole discretion to select the financing entity and to cause bonds to be issued, including the right to defer or postpone the issuance, assignment, sale, or transfer of wildfire protection property. The commission shall not impose any penalty, disallowance, or other negative consequence on the electric utility in respect of its exercise of such discretion.

(d) The commission may create, pursuant to an application from an electric utility, a nonbypassable surcharge referred to as a wildfire protection charge, which shall be applied to recover financing costs and wildfire protection costs. The wildfire protection charge shall be a dedicated, discrete tariff rider. The commission shall, in any financing order, establish a procedure for periodic true-up adjustments to wildfire protection charges, which shall be made at least annually and may be made more frequently. Within thirty days after receiving an electric utility's filing of a true-up adjustment, the commission's review of the filing shall be limited to mathematical or clerical errors as determined in accordance with any true-up adjustment formulas set forth in the applicable financing order. The commission shall either approve the filing or inform the electric utility of any mathematical or clerical errors in its calculation. If the commission informs the electric utility of mathematical or clerical errors in its calculation, the electric utility shall correct its error and refile its true-up adjustment. The timeframes previously described in this subsection shall apply to a refiled true-up adjustment.

(e) Wildfire protection charges are wildfire protection property when, and to the extent that, a financing order authorizing the wildfire protection charges has become effective in accordance with this part, and the wildfire protection property shall thereafter continuously exist as property for all purposes, and all of the rights and privileges relating to that property shall continuously exist for the period and to the extent provided in the financing order, but in any event until the bonds are paid in full, including all principal, premiums, if any, interest with respect to the bonds, and all other financing costs are paid in full or, in the event the wildfire protection property has been assigned to an assignee in connection with the exercise of remedies upon a default under the terms of the bonds, until the receipt by such assignee of proceeds in an amount sufficient to repay the principal amount of, and interest that would have accrued on, the bonds had they remained outstanding. A financing order may provide that the creation of wildfire protection property shall be simultaneous with the sale of the wildfire protection property to an assignee as provided in the application of the pledge of the wildfire protection property to secure the bonds.

(f) Any successor to a financing entity shall be bound by the requirements of this chapter and shall perform and satisfy all obligations of, and have the same rights under a financing order as, and to the same extent as, the financing entity.

(g) Neither financing orders nor bonds issued under this part shall constitute a debt or liability of the State or of any political subdivision thereof, nor shall they constitute a pledge of the full faith and credit of the State or any of its political subdivisions, but are payable solely from the funds provided therefor under this part. All bonds shall contain on the face thereof a statement to the following effect: "Neither the full faith and credit nor the taxing power of the State of Hawaii is pledged to the payment of the principal of, or interest on, this bond."

(h) The issuance of bonds under this part shall not directly, indirectly, or contingently obligate the State or any political subdivision thereof to levy or pledge any form of taxation or to make any appropriation for their payment.

(i) To the extent that any interest in wildfire protection property is sold, assigned, or is pledged as collateral pursuant to subsection (b), the commission shall require the public utility to contract with the financing entity and its assignees that it will continue to operate its system to provide service to consumers within its service territory, will collect amounts in respect of the wildfire protection charges for the benefit and account of the financing entity and its assignees, and will account for and remit these amounts to or for the account of the financing entity or its assignees. Contracting with the financing entity and its assignees in accordance with that authorization shall not impair or negate the characterization of the sale, assignment, or pledge as an absolute transfer, a true sale, or a security interest, as applicable. To the extent that billing, collection, and other related services with respect to the provision of the public utility's services are provided to a consumer by any person or entity other than the public utility in whose service territory the consumer is located, that person or entity shall collect the wildfire protection charges and any associated fixed recovery tax amounts from the consumer for the benefit and account of the public utility, financing entity, or assignees with the associated revenues remitted solely for such person's benefit as a condition to the provision of electric service to that consumer. Each financing order shall impose terms and conditions, consistent with the purposes and objectives of this chapter, on any person or entity responsible for billing, collection, and other related services, including without limitation collection of the wildfire protection charges and any associated fixed recovery tax amounts, that are the subject of the financing order.

(j) The financing entity may issue bonds upon approval by the commission in a financing order. Bonds shall be nonrecourse to the credit or any assets of the public utility, other than the wildfire protection property as specified in that financing order.

(k) Wildfire protection property that is specified in a financing order shall constitute an existing, present property right, notwithstanding the fact that the imposition and collection of wildfire protection charges depend on the electric utility continuing to provide services or continuing to perform its servicing functions relating to the collection of wildfire protection charges or on the level of future service consumption, including electricity consumption. Wildfire protection property shall exist whether or not the wildfire protection charges have been billed, have accrued, or have been collected and notwithstanding the fact that the value for a security interest in the wildfire protection property, or amount of the wildfire protection property, is dependent on the future provision of service to consumers. All wildfire protection property specified in a financing order shall continue to exist until the bonds issued pursuant to a financing order and all associated financing costs are paid in full or, in the event the wildfire protection property has been assigned to an assignee in connection with the exercise of remedies upon a default under the terms of the bonds, until the receipt by such assignee of proceeds in an amount sufficient to repay the principal amount of, and interest that would have accrued on, the bonds had they remained outstanding.

(l) Wildfire protection property, wildfire protection charges, and the interests of an assignee, bondholder, or financing entity, or any pledgee in wildfire protection property and wildfire protection charges shall not be subject to setoff, counterclaim, surcharge, recoupment, or defense by the electric utility or any other person or in connection with the bankruptcy, reorganization, or other insolvency proceeding of the electric utility, any affiliate of the electric utility, or any other entity.

(m) Notwithstanding any other law to the contrary, any requirement under this part or a financing order that the commission takes action with respect to the subject matter of a financing order shall be binding upon the commission, as it may be constituted from time to time, and any successor agency exercising functions similar to the commission, and the commission shall have no authority to rescind, alter, or amend that requirement in a financing order.

(n) The electric utility may sell and assign all or portions of its interest in wildfire protection property to one or more financing entities that make that wildfire protection property the basis for issuance of bonds, to the extent approved in a financing order. The electric utility or financing entity may pledge wildfire protection property as collateral, directly or indirectly, for bonds to the extent approved in the pertinent financing orders providing for a security interest in the wildfire protection property, in the manner set forth in section 269-G. In addition, wildfire protection property may be sold or assigned by either of the following:

(1) The financing entity or a trustee for the holders of bonds or the holders of an ancillary agreement in connection with the exercise of remedies upon a default under the terms of the bonds; or

(2) Any person acquiring the wildfire protection property after a sale or assignment pursuant to this chapter.

§269-F Wildfire protection charge. (a) The commission may create, pursuant to a financing order approved pursuant to section 269-E, a nonbypassable charge for a financing entity, referred to as a wildfire protection charge that shall be applied to the repayment of bonds and related financing costs as described in this part. The wildfire protection charge and any associated fixed recovery tax amounts may be a usage-based charge, a flat user charge, or a charge based upon customer revenues as determined by the commission for each consumer class in any financing order.

(b) As long as any bonds are outstanding and any financing costs have not been paid in full or, in the event the wildfire protection property has been assigned to an assignee in connection with the exercise of remedies upon a default under the terms of the bonds, proceeds in an amount sufficient to repay principal and interest on the bonds that would have accrued had they remained outstanding have not been received, any wildfire protection charge and any associated fixed recovery tax amounts authorized under a financing order shall be nonbypassable. Subject to any exceptions provided in a financing order, a wildfire protection charge and any associated fixed recovery tax amounts shall be paid by all existing and future consumers within the utility service territory.

(c) The wildfire protection charge shall be collected by an electric utility or its successors, in accordance with subsection (a), in full through a charge that is separate and apart from the electric utility's rates.

(d) An electric utility may exercise the same rights and remedies under its tariff and applicable law and regulation based on a consumer's nonpayment of the wildfire protection charge as it could for a consumer's failure to pay any other charge payable to that electric utility.

§269-G Security interests in wildfire protection property; financing statements. (a) A security interest in wildfire protection property is valid and enforceable against the pledgor and third parties, subject to the rights of any third parties holding security interests in the wildfire protection property perfected in the manner described in this section, and attaches when all of the following have taken place:

(1) The commission has issued a financing order authorizing the wildfire protection charge included in the wildfire protection property;

(2) Value has been given by the pledgees of the wildfire protection property; and

(3) The pledgor has signed a security agreement covering the wildfire protection property.

(b) A valid and enforceable security interest in wildfire protection property is perfected when it has attached and when a financing statement has been filed with the bureau of conveyances of the State naming the pledgor of the wildfire protection property as "debtor" and identifying the wildfire protection property.

Any description of the wildfire protection property shall be sufficient if it refers to the financing order creating the wildfire protection property. A copy of the financing statement shall be filed with the commission by the public utility that is the pledgor or transferor of the wildfire protection property, and the commission may require the public utility to make other filings with respect to the security interest in accordance with procedures that the commission may establish; provided that the filings shall not affect the perfection of the security interest.

(c) A perfected security interest in wildfire protection property shall be a continuously perfected security interest in all wildfire protection property revenues and proceeds arising with respect thereto, whether or not the revenues or proceeds have accrued. Conflicting security interests shall rank according to priority in time of perfection. Wildfire protection property shall constitute property for all purposes, including for contracts securing bonds, whether or not the wildfire protection property revenues and proceeds have accrued.

(d) Subject to the terms of the security agreement covering the wildfire protection property and the rights of any third-parties holding security interests in the wildfire protection property perfected in the manner described in this section, the validity and relative priority of a security interest created under this section shall not be defeated or adversely affected by the commingling of revenues arising with respect to the wildfire protection property with other funds of the public utility that is the pledgor or transferor of the wildfire protection property, or by any security interest in a deposit account of that public utility perfected under chapter 490, article 9, into which the revenues are deposited.

Subject to the terms of the security agreement, upon compliance with the requirements of section 490:9-312(b)(1), the pledgees of the wildfire protection property shall have a perfected security interest in all cash and deposit accounts of the electric utility in which wildfire protection property revenues have been commingled with other funds.

(e) If default occurs under the security agreement covering the wildfire protection property, the pledgees of the wildfire protection property, subject to the terms of the security agreement, shall have all rights and remedies of a secured party upon default under chapter 490, article 9, and shall be entitled to foreclose or otherwise enforce their security interest in the wildfire protection property, subject to the rights of any third-parties holding prior security interests in the wildfire protection property perfected in the manner provided in this section. In addition, the commission may require in the financing order creating the wildfire protection property that, in the event of default by the electric utility in payment of wildfire protection property revenues, the commission and any successor thereto, upon the application by the pledgees or transferees, including assignees of the wildfire protection property, under section 269-H, and without limiting any other remedies available to the pledgees or assignees by reason of the default, shall order the sequestration and payment to the pledgees or assignees of wildfire protection property revenues. Any order shall remain in full force and effect notwithstanding any bankruptcy, reorganization, or other insolvency proceedings with respect to the debtor, pledgor, or transferor of the wildfire protection property. Any surplus in excess of:

(1) Amounts necessary to pay principal, premiums, if any, interest, costs, and arrearages on the bonds, and associated financing costs arising under the security agreement; or

(2) In the event the wildfire protection property has been assigned to an assignee in connection with the exercise of remedies upon a default under the terms of the bonds, an amount sufficient to repay the principal amount of, and interest that would have accrued on, the bonds had they remained outstanding,

shall be remitted to the debtor or to the pledgor or transferor.

(f) Sections 490:9-204 and 490:9-205 shall apply to a pledge of wildfire protection property by the public utility, an affiliate of the public utility, or a financing entity.

§269-H Transfers of wildfire protection property. (a) A transfer or assignment of wildfire protection property by the public utility to an assignee or to a financing entity, or by an assignee of the public utility or a financing entity to another financing entity, which the parties in the governing documentation have expressly stated to be a sale or other absolute transfer, in a transaction approved in a financing order, shall be treated as an absolute transfer of all of the transferor's right, title, and interest, as in a true sale, and not as a pledge or other financing, of the wildfire protection property, other than for federal and state income and franchise tax purposes.

(b) The characterization of the sale, assignment, or transfer as an absolute transfer and true sale and the corresponding characterization of the property interest of the assignee shall not be affected or impaired by, among other things, the occurrence of any of the following:

(1) Commingling of wildfire protection charge revenues with other amounts;

(2) The retention by the seller of either of the following:

(A) A partial or residual interest, including an equity interest, in the financing entity or the wildfire protection property, whether direct or indirect, subordinate or otherwise; or

(B) The right to recover costs associated with taxes, franchise fees, or license fees imposed on the collection of wildfire protection charge;

(3) Any recourse that an assignee may have against the seller;

(4) Any indemnification rights, obligations, or repurchase rights made or provided by the seller;

(5) The obligation of the seller to collect wildfire protection charges on behalf of an assignee;

(6) The treatment of the sale, assignment, or transfer for tax, financial reporting, or other purpose; or

(7) Any true-up adjustment of the wildfire protection charge as provided in the financing order.

(c) A transfer of wildfire protection property shall be deemed perfected against third persons when both of the following occur:

(1) The commission issues the financing order authorizing the wildfire protection charge included in the wildfire protection property; and

(2) An assignment of the wildfire protection property in writing has been executed and delivered to the assignee.

(d) As between bona fide assignees of the same right for value without notice, the assignee first filing a financing statement in accordance with chapter 490, article 9, part 5, naming the assignor of the wildfire protection property as debtor and identifying the wildfire protection property shall have priority. Any description of the wildfire protection property shall be sufficient if it refers to the financing order creating the wildfire protection property. A copy of the financing statement shall be filed by the assignee with the commission, and the commission may require the assignor or the assignee to make other filings with respect to the transfer in accordance with procedures the commission may establish, but these filings shall not affect the perfection of the transfer.

§269-I Financing entity successor requirements; default of financing entity. (a) Any successor to an electric utility subject to a financing order, whether pursuant to any bankruptcy, reorganization, or other insolvency proceeding, or pursuant to any merger, sale, or transfer, by operation of law, or otherwise, shall be bound by the requirements of this part. The successor of the electric utility shall perform and satisfy all obligations of the electric utility under the financing order, in the same manner and to the same extent as the electric utility, including the obligation to collect and pay the wildfire protection charge to any financing party as required by a financing order or any assignee. Any successor to the electric utility shall be entitled to receive any fixed recovery tax amounts otherwise payable to the electric utility.

(b) The commission may require in a financing order that if a default by the electric utility in remittance of the wildfire protection charge collected arising with respect to wildfire protection property occurs, the commission, without limiting any other remedies available to any financing party by reason of the default, shall order the sequestration and payment to the beneficiaries of the wildfire protection charge collected arising with respect to the wildfire protection property. Any order shall remain in full force and effect notwithstanding any bankruptcy, reorganization, or other insolvency proceedings with respect to the electric utility.

§269-J Severability. If any provision of this part is held to be invalid or is superseded, replaced, repealed, or expires for any reason:

(1) That occurrence shall not affect any action allowed under this part that is taken before that occurrence by the commission, a financing entity, a bondholder, or any financing party, and any such action shall remain in full force and effect; and

(2) The validity and enforceability of the rest of this part shall remain unaffected."

SECTION 9. Chapter 269-17, Hawaii Revised Statutes, is amended to read as follows:

"§269-17 Issuance of securities. A public utility corporation may, on securing the prior approval of the public utilities commission, and not otherwise, except as provided in section 269-D, issue stocks and stock certificates, bonds, notes, and other evidences of indebtedness, payable at periods of more than twelve months after the date thereof, for the following purposes and no other, namely: for the acquisition of property or for the construction, completion, extension, or improvement of or addition to its facilities or service, or for the discharge or lawful refunding of its obligations or for the reimbursement of moneys actually expended from income or from any other moneys in its treasury not secured by or obtained from the issue of its stocks or stock certificates, [or] bonds, notes, or other evidences of indebtedness, for any of the aforesaid purposes except maintenance of service, replacements, and substitutions not constituting capital expenditure in cases where the corporation has kept its accounts for [~~such~~] expenditures in [~~such~~] a manner as to enable the commission to ascertain the amount of moneys so expended and the purposes for which the expenditures were made, and the sources of the funds in its treasury applied to the expenditures. As used [~~herein,~~] in this section, "property" and "facilities"[,] mean property and facilities used in all operations of a public utility corporation whether or not included in its public utility operations or rate base. A public utility corporation may not issue securities to acquire property or to construct, complete, extend, [or] improve, or add to its facilities or service if the commission determines that the proposed purpose will have a material adverse effect on its public utility operations.

All stock and every stock certificate, and every bond, note, or other evidence of indebtedness of a public utility corporation not payable within twelve months, issued without an order of the commission authorizing the same, then in effect, shall be void."

SECTION 10. Each electric utility shall file its first risk-based wildfire protection plan with the commission required under section 269-C, Hawaii Revised Statutes, established by section 8 of this Act, no later than December 31, 2024.

SECTION 11. Notwithstanding the provisions of section 39A-191, Hawaii Revised Statutes, and the provisions of Act 182, Session Laws of Hawaii 2022, as amended by Act 262, Session Laws of Hawaii 2023, the legislature authorizes the issuance of special purpose revenue bonds for wildfire protection costs that require an allocation of the annual state ceiling under section 39B-2, Hawaii Revised Statutes, for the period of July 1, 2024, through December 31, 2028. Notwithstanding section 39A-195, Hawaii Revised Statutes, a project agreement entered into in connection with the issuance of special purpose revenue bonds to finance wildfire protection costs may include a project agreement with an affiliate of an electric or gas utility and may contain provisions limiting the obligation to pay, and the security for the payment of, debt service and related deposits and costs in respect of such bonds or loans funded by such bonds to wildfire protection charges and wildfire protection property.

SECTION 12. The legislature authorizes the allocation of the annual state ceiling under section 39B-2, Hawaii Revised Statutes, to the issuance of bonds issued pursuant to section 8 of this Act that require such allocation in order for interest on the bonds to be tax-exempt for federal income tax purposes.

SECTION 13. In codifying the new part added to chapter 269, Hawaii Revised Statutes, by section 8 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating and referring to the new sections in this Act.

PART III

SECTION 14. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

SECTION 15. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 16. This Act shall take effect on July 1, 3000.

HOUSE OF REPRESENTATIVES	H.B. NO.	2700
THIRTY-SECOND LEGISLATURE, 2024		H.D. 3
STATE OF HAWAII		S.D. 1