Don’t approve HEI sale to NextEra unless it serves Hawaii’s interests

The big news on energy is the proposed sale of Hawaiian Electric (HEI) to NextEra, a Florida utility.

The state promises to do its due diligence. But we need to go further than simply checking the boxes. We need to determine whether the acquisition of HEI by NextEra will serve the long-term interests of Hawaii, our people and our economy.

The state needs to quickly formulate a comprehensive energy strategy, of the kind I promulgated in the recent gubernatorial campaign: Articulate what our essential interests are; establish clear conditions for approval of the NextEra takeover; and substantively enhance the powers of the state Public Utilities Commission to enforce those conditions through the rate setting process.

Let me be clear: I am not opposed in principle to NextEra ownership of HEI. We all know that Hawaiian Electric was experiencing great difficulty in fulfilling its public mission. Therefore what should concern us most is a business deal with no conditions.

We cannot afford a continuation of the status quo, where change is incremental and prices keep rising. Without clear public benefit, there is no case for substituting one monopoly for another, even bigger and more remote.

Our energy future is simply too important to be left solely in the hands of a private company. We need a meaningful public-private partnership to emerge.

The way forward is to take Eric Gleason, president of NextEra Transmission, at his word and create incentives that align public and private interests: "We share Hawaiian Electric’s vision of increasing renewable energy, modernizing its grid, reducing Hawaii’s dependence on foreign oil and, importantly, lowering customer bills."

Here are some of the elements that should be considered in determining a new and improved public policy:

» Should the power generation and power distribution businesses of HEI be separated to allow for greater competition and consumer choice?

» If we maintain the vertically integrated model, should NextEra be required to open its grid to all power producers on a fair and equal basis?

» Just as we have created incentives for solar and wind, should we do likewise to develop the considerable potential of geothermal power and build an inter-island grid?

» Should we require NextEra to say how much of Hawaii’s electricity production in five years’ time will come from solar, wind, geothermal, liquefied natural gas and other fossil fuels?

» Should NextEra be required to formally indicate a price reduction target for five years out? How big a price cut can we expect, and what are the returns to shareholders over the same period?

Our future turns on how we answer these questions. But whatever we conclude, one thing is clear: The PUC is underpowered and under-resourced to do its job of protecting the public interest against very large and well-resourced companies with political connections.

As I stated at the October Hawaii Energy Policy Forum, the PUC needs to be more of a state budgetary priority. It should also be empowered to set rates by performance against a range of metrics, and not simply cost plus.

Hawaii is at a turning point in our energy future. The state has an opportunity to create a new energy model in partnership with NextEra and we shouldn’t squander this chance.

With decisive leadership, and community support, I believe we can look forward to a much cleaner and greener Hawaii based on a sustainable energy policy that invests in renewables, protects consumers, stimulates growth and creates a healthier economy.