NextEra Energy Inc., the company looking to buy Hawaiian Electric Industries Inc., countered its critics in a state filing Monday, promising to bring down fixed costs on customer bills while helping Hawaii meet its 100 percent renewable electric power goal.
In the filing with the Public Utilities Commission, Florida-based NextEra laid out an updated offering in response to concerns presented in July by 28 groups involved in the review of the company’s proposed purchase of HEI as well as opposition from Gov. David Ige and the state Consumer Advocate.
"Just because it is difficult, we are not going to let that stop us," said Eric Gleason, president of NextEra Energy Hawaii, in a conference call with reporters Monday.
NextEra in December announced its plan to buy HEI — parent company of Hawaiian Electric Co., Hawaii 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, the deal is expected to close by June.
NextEra added more than 50 new commitments to its proposal, including supporting the state’s goal to reach 100 percent of its utility electrical generation from renewable resources by 2045, "if not sooner," committing to more than $465 million in customer savings and $500 million in economic benefits for the state over a five-year period as well as accelerating the development of smart grids throughout the isles.
"We want to do the right thing by customers," Gleason said. "We’re not cutting the bills in half, but we are going in the right direction. This is a start. This is a conservative estimate."
NEXTERA SPEAKS UP
Key points in the Florida power company’s updated proposal to buy HEI:
» Save ratepayers $465 million over five years. » Supports goal of 100 percent renewables by 2045. » Install smart meters for all customers by 2019. » Contribute $2.2 million a year to charities. » Will not sell Hawaiian Electric for at least 10 years. » CEO will hold community meetings every year. » Will operate as a Hawaii business with aloha.
A FEW BUCKS SAVED
Estimated savings per residential customer over five years:
» Oahu: $372 » Molokai: $343 » Lanai: $409 » Maui: $473 » Hawaii: $373
Source: NextEra
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The breakdown for residential customer savings is estimated to be $372 for Oahu customers over five years, with an average of $400 across the four islands.
Those savings start the first year, Gleason said.
"Together with NextEra Energy, Hawaiian Electric could offer less expensive energy than they could on their own," Gleason said. "We can’t promise customer bills will go down. Today Hawaiian Electric is close to 70 percent oil-fired generation. If (oil prices) go up, that tends to push bills up. We need to get off oil, and that is going to take time."
NextEra’s original proposal, submitted to the PUC in January, included commitments to save ratepayers $60 million over four years.
The updated proposal did not sway NextEra’s critics.
"In many ways this is repackaging the existing deal with only modest changes," said Kyle Datta, founding partner of the renewable energy advocacy group Ulupono Initiative.
"NextEra isn’t listening," said Robert Harris, spokesman for the Alliance for Solar Choice, a lobbying group for the solar industry. "They haven’t come forward with a concrete plan nor addressed the fundamental problems with their business model. Shareholders and corporate executives will profit more than Hawaii residents."
Ige, who announced in July his opposition to the sale of HEI to NextEra, said in an interview Friday that he favors a new business model for the state’s electrical utility, one in which the power company would no longer be the main generator of electricity, but would distribute power from a variety of smaller producers. Ige said he is not certain NextEra is the right partner to bring about that transformation.
Gleason said distributed energy is part of the sustainable business model NextEra is working to develop for HECO.
"We want as much distributed energy as can be integrated on the system to benefit all customers," Gleason said. "Central generation is going to be play an important role in supplying lowest-cost power for everyone. We think there are benefits in the utility owning some of that."
Last week Ige said he is opposed to HECO using liquefied natural gas. NextEra said they will not rule out LNG as a possible way to cut costs.
"LNG, we believe, would still have potential to lower rates," Gleason said. "It would lower rates in 2019 and beyond."
NextEra said repeatedly it is committed to the 100 percent renewable goal signed into law by Ige in June.
"We are totally committed to get Hawaii to 100 percent renewables by 2045, if not sooner," Gleason said.
NextEra said it will install smart meters, which allow two-way communication for monitoring and billing, at a majority of its customers’ locations by July 2018 and for all customers by Dec. 31, 2019.
The company also reaffirmed that it would keep HECO locally managed.
A major concern among many interveners was the fact NextEra is based in Florida. In response, the company added to its promise to have a local advisory board. NextEra said the advisory board will include representatives from the counties of Oahu, Maui and Hawaii. NextEra promised the Hawaii CEO would hold community meetings on each island, and two on the Big Island, yearly.
"Most people are very focused on NextEra Energy being from the mainland," Gleason said in the conference call. "We are making sure there is a right level of local government and control."
NextEra also said that local management will remain the primary point of contact in regulatory matters, as the president and CEO of the newly named Hawaiian Electric Cos. will meet with the Commission and the Consumer Advocate on a quarterly basis if not more.
NextEra said it will contribute $2.2 million annually to charities for a minimum of 10 years after the sale closes.
NextEra Energy also included commitments that it will not sell Hawaiian Electric Holdings or its electrical utility subsidiaries for a minimum of 10 years.
The company said it has responded to 2,000 information requests from interveners and produced 40,000 pages of answers to some 4,000 individual questions.
Gleason said he still believes the door is open for NextEra to prove it is the best suitor for Hawaii.
As most interveners and the governor have said that they are opposed to the sale, "as currently proposed. Not just we oppose the merger," Gleason said.
The next step in the process is the various parties will review NextEra’s filing and review proposed commitments.
"We are proposing 50-something new conditions, commitments that would be binding on us," Gleason said. "The governor has said it is still early in the process. The way the commission has laid it out, no matter what, we are leading to a commission decision. No matter what."