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The next era for Hawaii’s energy will soon be upon us, and it’s clear that much of the leadership of the state doesn’t want it to look like the old one.
NextEra Energy Inc., the Florida-based company that wants to acquire Hawaiian Electric Industries, needs the approval of the state Public Utilities Commission before that can happen.
So far its application has been met with skepticism or, at best, ambivalence.
That means over the coming months of public meetings and hearings before the PUC, NextEra will need to overcome a mountain of doubt from its potential customers, for whom pocketbook concerns have been, and should be, paramount.
Why, they rightly wonder, should Hawaii embark on a long-term franchise with another company similar to what’s served them for the past century, especially as changing technology suggests an overhaul is necessary?
In addition, the state has committed by law to achieve 100 percent renewable energy in its electricity generation. Whoever takes over that mission will need to embrace change and innovation more fully than NextEra has done.
Numerous intervenors in the PUC docket on the proposed sale have criticized the company’s filings as leaving questions unanswered — one of the reasons why NextEra responded last week with an expanded list of commitments it would make if the sale goes forward.
Its executives likely felt the sharpest prod in the critiques from the state consumer advocate and, most recently, by Gov. David Ige.
The governor started distancing himself from NextEra with a statement in July that he won’t support the $4.3 billion proposed purchase of Hawaiian Electric Industries Inc.
Then he doubled down by saying he opposed the import of liquefied natural gas (LNG) as a fuel for generating electrical power — which NextEra favors.
In an interview with Star-Advertiser business writer Kathryn Mykleseth, Ige correctly noted that a different business model is needed, a utility that’s sustained primarily by distributing energy generated from multiple partners in a cost-effective way.
That means radically decreasing Hawaii’s reliance on fossil fuels and producing its own energy from renewable sources.
NextEra President Eric Gleason, who met last week with the Star-Advertiser editorial board, said NextEra believes it can make a case for retaining some of the role of power generation for the company. But so far, there’s been little public enthusiasm for business as usual.
For example, NextEra has sought the use of LNG as a "bridge" to a portfolio dominated by renewable fuels. The question, said state Rep. Chris Lee, is whether that bridge will be in the economic interest of the state, anyway.
Lee, who chairs the House Committee on Energy and Environmental Protection, led a group of state and county officials who last week called for a study of alternative, publicly-controlled structures for the utility. This could range from a ratepayer-owned cooperative such as what operates on Kauai to a municipally owned and run utility, Lee said.
He pointed to HEI’s declining bond ratings as evidence that the corporate- style "vertically integrated model no longer works."
He underscored that the Legislature that structured the utility franchise law decades ago very well could decide that law should be changed.
On the issue of LNG, Lee said, the volatility of the oil and natural gas prices makes it uncertain that the investment in the gas infrastructure would pay off in fuel savings for the customers.
He echoed concern, previously aired by the PUC, that utilities simply could treat capital costs as a means of justifying higher rates and increasing profits.
Such gold-plated capital improvement proposals would need tough scrutiny from the PUC, to be sure, but a full inquiry into the role LNG could play in cost containment is still worthwhile.
The route to Hawaii’s energy future is still uncertain. There are some potent advantages that NextEra brings to the table, not the least of which is its size, resources and purchasing power. All of that could help underwrite the improvements in the grid Hawaii needs, such as "smart meters" allowing customers to plan electricity use when it’s cheapest.
And Gleason is correct that no previous utility has embarked on the dual mission of aggressively pursuing clean energy while lowering costs, so a precise road map has not been drawn.
But Hawaii, the ideal market to serve as a laboratory for clean-energy innovation, offers advantages, too.
And as so many of community leaders have said, its residents deserve to see with more clarity what their choices are — from NextEra, or whoever gets the green light.
