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Unpredictable Power Shutoffs Threaten 5-15% Revenue Loss for Hawaii Businesses

·8 min read·⚡ Act Now

Executive Summary

Hawaiian Electric's increased reliance on Public Safety Power Shutoffs (PSPS), rather than infrastructure upgrades, introduces significant operational risks and potential revenue disruption for businesses across the islands. Businesses must accelerate contingency planning for de-energized periods, as these events can occur with little notice.

  • Small Business Operators: Risk of spoilage, lost sales, and extended downtime; estimate 5-15% revenue loss per day offline.
  • Tourism Operators: Disruption to guest services, potential cancellations, and negative reviews; estimate 5-10% revenue loss per day.
  • Agriculture & Food Producers: Crop damage, spoilage of perishable goods, and disruption to processing; potential 15-25% loss for affected harvests.
  • Real Estate Owners: Tenant disruption, impact on property value perception, and potential for uninsurable damages.
  • Entrepreneurs & Startups: Interruption of critical digital operations, data loss, and halted production.
  • Action: Owners must develop and test alternative power and business continuity plans within 30 days.

Action Required

High Priority

Increased or unpredictable PSPS events will cause direct operational downtime and potential spoilage/loss for businesses, requiring immediate attention to backup power and business continuity plans.

All businesses must develop and test comprehensive power outage contingency plans and assess essential backup power needs within 30 days. Prioritize communication, inventory management, and securing essential operational continuity to mitigate financial losses and guest/customer dissatisfaction. For agriculture, immediate generator and water storage solutions are critical.

Who's Affected
Small Business OperatorsTourism OperatorsAgriculture & Food ProducersReal Estate OwnersEntrepreneurs & Startups
Ripple Effects
  • →Increased PSPS events → reduced operational reliability for businesses → potential relocation of businesses away from Hawaii
  • →PSPS reliance → higher operational costs for businesses (backup power, lost inventory) → increased prices for goods and services
  • →Unpredictable power outages → damage to Hawaii's tourism brand → decreased visitor numbers and associated economic impact
Electric utility pole featuring colorful cables and utility transformer against tropical backdrop.
Photo by Juan Pablo Daniel

THE CHANGE: SHIFTING FROM INFRASTRUCTURE TO SHUTOFFS

Hawaiian Electric (HECO) appears to be prioritizing Public Safety Power Shutoffs (PSPS) as its primary method for mitigating wildfire risks, a strategy that observers suggest is more cost-effective than the substantial infrastructure investments in vegetation management and utility pole hardening previously pledged. This shift means businesses and residents should anticipate more frequent and potentially unpredictable power interruptions, especially during periods of high winds or other adverse weather conditions. Unlike targeted grid hardening, PSPS events can impact large geographic areas with little advance warning, forcing non-essential services and operations to cease.

WHO'S AFFECTED?

Small Business Operators

For restaurants, retail shops, service providers, and local franchises, a PSPS event translates directly to lost operating hours and potential spoilage of inventory (e.g., food, pharmaceuticals). Without reliable power, refrigeration fails, electronic point-of-sale systems go offline, and essential services like hair salons or repair shops cannot function. Each day without power could result in a 5-15% loss in expected revenue, depending on the business type and its reliance on electricity. The inability to conduct transactions or serve customers necessitates immediate planning for backup power solutions.

Tourism Operators

Hotels, tour companies, and vacation rentals face significant disruptions to guest services. Power outages affect everything from air conditioning and lighting to internet access, essential for modern hospitality. This can lead to guest dissatisfaction, negative reviews, and potential cancellations, impacting occupancy rates. Tour operators may have to cancel excursions, leading to direct revenue loss. The unpredictable nature of PSPS events makes it difficult to manage guest expectations and operational schedules, potentially resulting in a 5-10% revenue loss per day of sustained outage.

Agriculture & Food Producers

This sector is particularly vulnerable. Farmers rely on power for irrigation pumps, greenhouse climate control, and processing equipment. Food producers need refrigeration, freezing, and manufacturing machinery. Animal husbandry operations require power for life support systems. During a PSPS event, crops can wither, perishable goods can spoil in storage, and processing lines can halt, leading to direct losses that could range from 15-25% for affected harvests or batches. Extended outages could jeopardize entire growing seasons.

Real Estate Owners

Property owners and landlords will face challenges managing tenant expectations and ensuring business continuity for their lessees. While not directly losing operational revenue, owners may deal with increased tenant complaints, potential lease disputes if service interruptions are prolonged, and a decreased desirability for properties in areas prone to frequent PSPS events. This could indirectly impact property valuations and future rental income potential over the long term.

Entrepreneurs & Startups

For businesses heavily reliant on digital infrastructure, cloud services, or manufacturing, PSPS events pose a significant threat. Data centers, servers, and critical software operations can be disrupted, leading to data loss or corruption if systems are not properly protected. Startups trying to scale may face production stoppages or inability to meet client demands, damaging their credibility and investor confidence. The cost of implementing robust backup power for sensitive equipment can be prohibitive for early-stage companies.

SECOND-ORDER EFFECTS

Increased reliance on PSPS, while potentially lowering HECO's direct infrastructure costs, has cascading negative effects on Hawaii's isolated economy. Frequent PSPS events can deter new business investment and relocation as operational reliability becomes a major concern. For tourism, consistent power disruptions can damage the state's reputation as a stable destination, leading to reduced visitor numbers and impacting the jobs of thousands. The need for businesses to invest in costly, often imported, backup generators and fuel further strains supply chains and increases operating expenses which may eventually be passed on to consumers, exacerbating the already high cost of living in Hawaii.

WHAT TO DO

Given the increased likelihood of PSPS, proactive measures are essential. The following steps should be prioritized within the next 30 days:

Small Business Operators

  1. Develop a Power Outage Contingency Plan: Detail specific actions for different durations of outages (e.g., 4-hour, 12-hour, 24-hour). This should include communication protocols with staff and customers.
  2. Assess Backup Power Needs: For critical equipment (refrigeration, POS systems, essential lighting), evaluate the feasibility and cost of generators, uninterruptible power supplies (UPS), or battery storage. Prioritize essential functions for immediate backup.
  3. Inventory Management: Implement inventory tracking systems that minimize spoilage risk. Consider ordering smaller, more frequent deliveries if possible, and identify non-perishable alternatives or storage solutions.
  4. Secure Alternative Workspaces: Identify businesses or locations (e.g., coworking spaces with generator backup) where essential staff can relocate temporarily if needed.

Tourism Operators

  1. Guest Communication Protocols: Establish clear procedures for informing guests about potential PSPS events and the hotel's preparedness plans. Offer transparent communication to manage expectations.
  2. Backup Power for Essential Services: Prioritize backup power for critical guest services, including emergency lighting, essential communication systems, and limited HVAC, especially for longer-stay accommodations.
  3. Review Cancellation Policies: Ensure cancellation and refund policies clearly address power outage scenarios to mitigate financial loss and customer dissatisfaction.
  4. Staff Training: Train staff on emergency procedures, customer service during outages, and safe operation of backup systems.

Agriculture & Food Producers

  1. Invest in Backup Generation: Prioritize investment in reliable backup generators for irrigation, climate control in greenhouses, and critical processing/storage (e.g., refrigeration, freezers, milk chilling).
  2. Water Storage: Explore options for on-site water storage to maintain irrigation capacity during short-term outages.
  3. Spillover/Relocation Plans: Develop plans for moving high-value perishable goods to alternative cold storage facilities if local power is expected to be out for an extended period.
  4. Diversify Crops/Products: Where feasible, consider growing crops or producing goods that are less susceptible to short-term power interruptions.

Real Estate Owners

  1. Tenant Consultation: Engage in proactive discussions with tenants about their PSPS preparedness plans and offer resources or guidance where possible.
  2. Infrastructure Assessment: For commercial properties, assess the feasibility and cost of installing or upgrading backup power systems for common areas and critical building functions.
  3. Lease Review: Review lease agreements for clauses related to utility service interruptions and force majeure. Consider incorporating provisions that address PSPS impacts for new leases.

Entrepreneurs & Startups

  1. Cloud Data Protection: Ensure robust data backup and disaster recovery solutions are in place for all critical digital assets, ideally with off-site or redundant cloud storage.
  2. UPS for Sensitive Equipment: Deploy UPS systems for servers, networking equipment, and workstations to allow for graceful shutdowns and prevent data corruption.
  3. Mobile Hotspot/Alternative Connectivity: Explore mobile hotspots or agreements with other businesses for temporary internet access during outages.
  4. Business Interruption Insurance: Review existing insurance policies to understand coverage for business interruption due to utility failures and explore options for additional coverage if necessary.

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