Florida-based NextEra Energy Inc. made its pitch Thursday for state regulators to approve its purchase of Hawaiian Electric Industries, saying it would save ratepayers $60 million over four years, not raise base rates for four years and keep all management local.
In a 98-page joint application with the state Public Utilities Commission, NextEra and HEI said, "NextEra Energy pledges that, for at least four years following the completion of the transaction, subject to approval of certain conditions, (the utility) will not submit any applications seeking a general base rate increase."
NextEra also said it will preserve Hawaii’s influence at its utilities and will not lay off employees for at least two years after the sale closes.
NextEra in December announced its plan to buy HEI, parent company of Hawaiian Electric Co., Hawai‘i Electric Light Co. and Maui Electric, for $4.3 billion. Through its utilities, HEI supplies power to approximately 95 percent of Hawaii’s population. If approved by the PUC, HEI shareholders and others, the deal is expected to close by the fourth quarter of 2015.
"NextEra Energy will not seek to recover through rates any acquisition premium, transaction or transition costs that may arise from the transaction," the companies said. "NextEra Energy will also maintain various protections designed to ensure that Hawaiian Electric and its customers are not impacted by the activities and businesses of other NextEra Energy entities and subsidiaries."
When the sale is finalized, HEI’s utilities under the name Hawaiian Electric Holdings will become a third principal business of NextEra. NextEra’s other subsidiaries include Florida Power & Light Co. and NextEra Energy Resources.
NextEra said its resources would help speed up the 2030 energy goals HECO proposed in August, which include lowering customer bills by 20 percent, tripling rooftop solar, and renewable energy reaching 65 percent of the utility’s energy mix.
"NextEra Energy commits to strengthening and accelerating Hawaiian Electric’s clean energy transformation through increased renewable energy — including integrating more rooftop solar energy — electric grid modernizations, energy storage and customer demand response programs," the companies said.
NextEra Energy will help HECO give customers more service options while achieving the utility’s stated renewable energy goals for 2030, said Alan Oshima, HECO president and chief executive officer.
"As the filing outlines, joining with NextEra Energy provides (HECO) with the unique opportunity to strengthen and accelerate our clean energy transformation," Oshima said. "Importantly, this partnership will help us deliver substantial value to Hawaiian Electric’s customers, including through NextEra Energy’s commitment not to request an increase in general base rates for at least four years following the close of the transaction and to forgo rate increases for recovery of operation and maintenance increases during that same period."
NextEra has said it can bring down electric rates in Hawaii, which are the highest in the nation. Residential customer electric bills for NextEra’s Florida utility are approximately 25 percent lower than the national average.
Under NextEra’s ownership, HECO will offer more affordable energy for its customers, said Eric Gleason, president of NextEra Energy Transmission.
"The filing of this application begins an important review process that we believe will ultimately result in a more affordable clean energy future for Hawaii," Gleason said. "We welcome the opportunity to engage directly with the PUC and the communities that Hawaiian Electric serves. As we move forward, our focus will be on applying our expertise and resources, alongside Hawaiian Electric’s, to bring significant benefits, savings and value to Hawaiian Electric customers and to create the clean energy future we all want for Hawaii."
State officials have voiced concern about Hawaii’s control after the deal closes. NextEra and HECO promised the local utilities will keep their names and be locally managed, and headquarters would remain in Honolulu. NextEra also said that the company would create an advisory board to help sustain the local influence in the company.
"NextEra Energy has committed to establish a local, independent advisory board to be made up of six to 12 members, all of whom will have substantial ties to the Hawaii community. The purpose of the board will be to provide input on matters of local and community interest," the companies said.
The companies promised that they would not lay off employees for at least two years dated once the sale is finalized.
"During the two-year period following the change in control, NextEra Energy will not implement involuntary workforce reductions of employees of the Hawaiian Electric Companies. NextEra Energy also commits that all existing collective bargaining agreements will be honored. In addition, NextEra Energy commits that employees will be credited for years of service with the Hawaiian Electric Companies when calculating future benefits," NextEra and HEI said.
In the announcement, the companies said HECO would also continue HEI’s current level of corporate giving as the advisory board will assume control.
"In continuation of the efforts by HEI and the Hawaiian Electric Companies to serve and support the Hawaii community, NextEra Energy commits that it will maintain HEI’s overall current level of corporate giving in HEI’s communities. NextEra Energy will look to the local advisory board and local management team as key advisors with respect to guiding the ongoing charitable giving and activities of the Hawaiian Electric Companies," the companies said.
In addition to the PUC, the acquisition needs federal approval and HEI shareholder approval. HEI filed for merger approval with the Federal Energy Regulatory Commission on Thursday.
NEXTERA’S PROMISES
>> Will save customers $60 million over four years
>> Will not seek an increase in general base rates for at least four years
>> Will keep current names
>> Headquarters will remain in Honolulu
>> Will continue HEI’s current level of corporate giving
>> Ratepayers will not have to pay acquisition costs.
