Investors are punishing a Hawaiian utility company that has come under scrutiny after wildfire ravaged part of the island of Maui, raising broader concerns about power grid operations as climate change brings on more intense natural disasters.

Hawaiian Electric Industries, Inc.’s stock sank roughly 40 per cent this week, wiping away US$1 billion from the company’s value, after allegations that one of its power lines started the fire that razed the town of Lahaina last week. 

The cause of the destructive fire that killed at least 99 people was not yet known as of Tuesday. But Hawaiian Electric has been criticized for not powering down its equipment once it was made aware of extreme weather conditions. Bloomberg News reported Tuesday on lawsuits filed on behalf of victims alleging the Maui utility was negligently responsible for the fire.

The Honolulu-based company told Bloomberg that it was focusing on restoration efforts, noting that the cause of the fire was undetermined. It said it would work with local governments reviewing the situation and declined to comment on potential legal liability or its stock price.

In an email to BNN Bloomberg in an email on Thursday that it did enable a protocol during the hurricane warnings. 
 
“Hawaiian Electric has protocols that may be used when high winds are expected, including not enabling the automatic reclosure of circuits that may open during a weather event. This was done before the onset of high winds on Aug. 8.,” a spokesperson for the company wrote in an email. 
 
They noted that  most utility companies, including itself, do not have a formal power shutoff program. 
 
“Preemptive, short-notice power shutoffs have to be coordinated with first responders and in Lahaina, electricity powers the pumps that provide the water needed for firefighting. Notifications also need to be made to customers with special medical needs who use specialized equipment,” they wrote. 

But Hawaiian Electric took another financial blow on Tuesday when S&P Global Ratings cut its bond rating to junk. 

One Morningstar, Inc. analyst lowered his value estimate of the stock to $23 per share from $34 following press reports about the company and the fire.  

“The loss of the market's confidence is a key near-term concern and will likely remain elevated for many years as the company works through responsibility and any liability for the recent wildfires across Hawaiian Electric's service territory,” Andrew Bischof wrote in a note to clients on Monday.

ARE UTILITIES PREPARED FOR EXTREME WEATHER?

The pressure on Hawaiian Electric has sparked a conversation about what utility and power companies are doing to prepare for extreme weather events, Mark Winfield, a professor at the faculty of environmental and urban change at York University and co-chair of the sustainable energy initiative, told BNNBloomberg.ca in a phone interview on Tuesday.

"The problem these utilities face is that, in the context of a changing climate, what they have seen in the past is no longer a reliable guide to what may happen the future,” he explained.

One possible strategy to deal with unpredictable weather events from climate change is having energy operators distribute resources at the local level, Winfield suggested.

“Rather than have classical electricity systems, such as one large asset distributing the power, we would move to relatively smaller and more localized power systems to help make communities less vulnerable,” he added.

Whenever extreme weather events happen around the world, and here in Canada, utility companies find a way to ensure they are prepared for the future, Dan Gent, director of transmission and reliability at Electricity Canada, told BNN Bloomberg on Tuesday.

“A lot of it comes down to asset management and learning from these tragic events,” he said.

Gent explained that new technologies, recommendations and a new way of running operations often arise in the aftermath of events such as this Maui fire.

“One hundred year storms are happening every three years now -- and we’re learning to adapt,” he said.

With files from Bloomberg News and The Associated Press.