Hawaii’s energy landscape poised for radical change

For most of us, electricity means the switch is flipped and the light goes on, the bill comes every month, we grumble and pay it, end of story.

It is now a whole new story for everyone in the state.

The announced purchase of Hawaiian Electric Industries by Florida-based Next-Era Energy sets up the first big challenge for Gov. David Ige and will cause a major restructuring of Hawaii’s sometimes exotic world of alternative energy production.

First, the more than $4 billion deal has to be approved by federal and state regulators, including the state Public Utilities Commission.

Ige will have a hand in that because the chairmanship of the PUC is up in the air. Hermina Morita was not reappointed by former Gov. Neil Abercrombie as chairwoman, but no one has been named to take her place. Presumably Ige can now act and install, with state Senate confirmation, either Morita or someone new.

Second, this deal is too bright and shiny to not lure all 76 members of the Legislature, who will want to bat around energy policy during the upcoming 2015 session.

And finally, there is the public, which is mostly fed up with Hawaiian Electric and is more than willing to embrace a new player who is promising cheaper power.

Jan TenBruggencate, former Honolulu Advertiser Kauai bureau chief and now acting chairman of the board of Kauai Island Utility Cooperative, which is the state’s only islandwide electric utility outside of the HEI companies, described the scene now as "uncharted territory."

"With the powerful local and international move toward renewables, with customer generation at unprecedented levels, with new emphasis on storage technologies and with new electronic and regulatory systems for managing both demand and supply," TenBruggencate said, NextEra Energy’s move to buy HEI is an act of faith that Hawaii’s energy market is valuable.

In an hourlong meeting with Honolulu Star-Advertiser editors and reporters, Jim Robo, CEO of NextEra Energy Inc., repeatedly stressed that his company was coming into town with the intention of lowering the price of electricity.

"We do the right thing by our customers. We are a very competitive company," Robo said.

Hawaii’s energy future, according to Robo, was both bright but lacking many specifics.

NextEra has formed a local company that is planning an energy cable between Maui and Honolulu, NextEra Energy Hawaii.

That underwater cable sounded somewhat iffy Thursday, as Robo described himself as "an agnostic about specific solutions."

"We haven’t decided yet," Robo said.

Talking about solar power, Robo said the bigger the better. Therefore rooftop solar, with its heavy government subsidies, is not as efficient as having an electric company run a big solar operation. The end result of not burning fossil fuel to make electricity is the same, but the economies of scale make it cheaper.

"I am not a great fan of incentives that distort the market," Robo said.

The question now is how all this will play with local political leaders. Hawaiian Electric, which can trace its inception through a meeting between King David Kalakaua and inventor Thomas Edison in 1881, has always woven its way through local politics.

If the deal goes through, folks in Florida will run the company, although Robo said Hawaiian Electric will retain local control. Still, it is to be part of the NextEra group, not a local company.

Whatever Gov. Ige, the PUC and the utility decide in the next year will set Hawaii’s energy future more profoundly than anything the state has ever done.