Gov. David Ige’s administration said Wednesday it is not in favor of NextEra Energy Inc.’s purchase of Hawaiian Electric Industries even after NextEra revised its proposal in August, adding more than 50 new binding commitments.
The state Office of Planning; the Department of Business, Economic Development and Tourism; and the state Consumer Advocate filed more than 480 pages Wednesday with the Public Utilities Commission, saying that even with NextEra’s revised commitments, the sale is not in the public interest.
“Only five of the 85 new or modified transaction commitments constitute meaningful commitments to provide benefits.”
Department of Business, Economic Development and Tourism
|
NextEra said in December it planned to buy HEI for $4.3 billion. The purchase has been approved by HEI and NextEra shareholders and the Federal Energy Regulatory Commission. PUC approval is the last and most problematic hurdle for supporters of the deal.
In August, NextEra added more than 50 new commitments, including customer savings of nearly $465 million and approximately $500 million in economic benefits over the first five years following the close of the merger. Residential customer savings are estimated to be $372 for Oahu customers over five years. The company also said it would help Hawaii get 100 percent of its utility electrical generation from renewable resources by 2045, “if not sooner.”
The added commitments were aired after Ige said on July 20 he opposed NextEra’s purchase of Hawaii’s largest electric utility and was recommending that the PUC reject the deal.
Ige’s administration made it clear Wednesday the latest round wasn’t enough to win the administration’s support.
The Office of Planning said it still recommends that NextEra’s purchase of HEI be denied.
The office listed options other than NextEra, including a strengthened Hawaiian Electric Co. through better-resourced regulation or the sale of HEI to a company approved by the PUC after competition based on benefits for the customers “rather than a company approved by HEI based on gain to its shareholders.”
“By approving this transaction, the commission takes plenty off the table: the benefits to which NextEra would have committed had it faced competition for its position, and the chance to attract other suitors who might bring more improvements than NextEra would,” the Office of Planning said.
The Consumer Advocate said that unless the company were to adopt the agency’s recommended conditions, NextEra’s purchase of HEI is not in the public interest.
“Some of these new commitments will have value for customers, if the proposed transaction is approved, but many of the new commitments do not offer significant value to customers, and the Consumer Advocate recommends that the commission adopt the Consumer Advocate’s conditions as set forth in direct testimony,” the Consumer Advocate said.
The conditions included protecting Hawaii’s ratepayers from having to pay for costs related to NextEra’s other subsidiaries.
NextEra’s commitment to increase the estimated savings fell short of winning over the Consumer Advocate.
The Consumer Advocate recommended that NextEra offer a transparent plan by which those estimated benefits will be “hard-wired” into a rate plan.
“Applicants should also not offer further new or modified commitments that are cagily worded that may be perceived as an attempt to pull the wool over the other parties’ eyes. This will only lead to unproductive exchanges amongst the parties that will benefit no one,” the Consumer Advocate wrote.
The Department of Business, Economic Development and Tourism said the new commitments made by NextEra were a “step in the right direction,” but noted that NextEra’s promised savings and added commitments bind the applicants to only a limited number of actual benefits.
“Only five of the 85 new or modified transaction commitments constitute meaningful commitments to provide benefits,” DBEDT said.
DBEDT said the commitments lack detail in explaining how they can be meaningfully enforced and lack accountability measures to make sure NextEra follows through with the added benefits. Many of the commitments merely recognize the need to comply with the law, DBEDT added. DBEDT also said many “commitments simply express NextEra’s agreement to maintain the status quo.”
NextEra could not be reached for comment late Wednesday.
When it announced the deal, NextEra said its resources would help speed up the 2030 energy goals HEI proposed in August 2014, which include lowering customer bills by 20 percent, renewable energy reaching 65 percent of the utility’s energy mix and tripling rooftop solar.
Randy Iwase, the Ige-appointed head of the PUC, has said his agency’s review could be finished by June but could take longer due to the historical significance of the sale.
