The arrival of a new major player on the Hawaii electrical power scene could — and should — create new capacity to accelerate Hawaii’s march toward renewable energy and cut customer costs. That is what the top-tier executives of NextEra Energy Inc., which proposes to acquire Hawaiian Electric Industries for $4.3 billion, repeatedly promised last week, citing their greater economies of scale as the reason they can deliver.
Everyone within earshot of NextEra CEO Jim Robo’s announcements fervently hopes they can. It could be a game-changer in the state, burdened with the nation’s highest energy bills. But it will take vigilance by public advocacy groups and careful probing by the state’s Public Utilities Commission over the next year or more to ensure the public interest remains paramount before signing off on the deal.
If that happens, the PUC and the entire community will have to ride herd and hold the Florida-based company to those promises.
There are reasons for both optimism and caution here.
First, the cautionary note. The critics point to cases involving NextEra’s subsidiary utility, Florida Power & Light Co., as well as campaign donations NextEra made across the Florida political landscape as evidence that the consumer interest doesn’t always come first in its calculations.
Integrity Florida, a nonpartisan government watchdog group, in March published a report titled "Power Play: Political Influence of Florida’s Top Energy Corporations." Among the myriad incidents it explored are requests for rate hikes over the past several years. In one 2012 case, the public counsel continually opposed various proposals as excessive but the regulators settled, approving a rate increase anyway.
The report juxtaposes this chronicle against records showing the utility’s rank among the top campaign contributors and a revolving door bringing former regulators in as new utility hires.
The bottom line here is that the public and its advocates in this state need to keep eyes wide open about how NextEra’s other utilities are run — and keep the PUC accountable for its decisions. Lawmakers should discuss ways to give the commission the expertise it needs to vet the claims Hawaiian Electric makes in its PUC dockets, whichever corporate entity is in charge.
Shifting to the more hopeful outlook: NextEra clearly has the experience in renewable energy development — wind and solar — and the resources to make advances where HECO seemingly has stalled.
In a meeting with the Honolulu Star-Advertiser editorial board, Robo said its research and development efforts that could benefit Hawaii ratepayers would not be underwritten by surcharges to those ratepayers. That assurance is welcome news, especially if it speeds the rollout of smart-grid improvements providing customers with better feedback and control of their usage and modernization upgrades to allow the fullest possible penetration of renewables on the grid.
The Hawaii Clean Energy Initiative compels the utility to meet conservation and green-energy conversion standards. Additionally, however, there are increasing financial incentives for boosting renewables in the utility portfolio, with more markets finding wind- and solar-energy production costs dropping below that of fossil fuels.
NextEra favors wind and solar as the most established and cost-effective technologies. It’s hard to argue with the bottom line, but as independent research progresses on other alternative strategies — biofuels, to name just one example — the utility should remain open to costing that out as well. And NextEra will have to take the stiff community opposition to large, intrusive wind turbines into consideration as a political counterweight.
Where wind and solar are concerned, executives affirm that the company can offer projects at utility scale that can lower costs more than the smaller independent producers, including rooftop solar. That’s good for the majority of HECO customers who still can’t afford their own installation or for the many who rent.
Still, rooftop solar is in Hawaii to stay. Regulators should ensure that private installations remain a viable option, especially as technology makes photovoltaic panels more affordable.
NextEra is smart to see battery storage as the next frontier in renewable energy and plainly wants to be ahead of the pack. Also attractive is its ability to finance the infrastructure needed for liquefied natural gas as a source of firm power.
As a bridge to higher renewable-energy use, LNG is a cheaper option than imported fuel oil, so makes sense as a fallback source for the foreseeable future.
"It starts with the customer … wanting to do the right thing for the customer and making sure that the solutions we bring are both low-cost and clean at the same time, that they’re the right solution for all the stakeholders," Robo told the editorial board.
The stakeholder group comprising Hawaii’s ratepayers wants to be sure its interests remain foremost. If the electric company of the future can provide significant relief to the customers as promised — sooner and more significantly than HECO has promised in the past — a changing of the guard would be a boon to the economy and good for everyone.
