Panel OKs bill to study electrical utility ownership

The Honolulu City Council Committee on Executive Matters and Legal Affairs adopted a resolution Tuesday to study public electrical utility ownership as a potential alternative to NextEra Energy Inc.’s purchase of Hawaiian Electric Industries.

The committee passed Resolution 15-214 with one reservation from Councilman Ron Menor and an objection from Honolulu Mayor Kirk Caldwell’s office. Seven Council members voted to pass the resolution. One member was absent.

The action by the committee is the first step in the process to analyze what ownership model is the most cost-effective for the city and taxpayers. Options the city would investigate include municipal or cooperative public ownership. The city will compare those with NextEra’s proposed $4.3 billion purchase of Hawaiian Electric Co.’s parent company.

City Council Chairman Ernie Martin, who introduced the resolution in July, said it is necessary for the city to look into different electrical utility models because of the high electricity prices the city is set to pay once rail is complete.

“Once the rail is constructed, the City and County of Honolulu will be the largest consumer of electricity, surpassing the military in respect to our needs,” Martin said. “It is a cost we are going to have to bear for years to come.”

With the study, Oahu would become the third island in Hawaiian Electric Industries’ territories looking into alternative ownership models. Maui Mayor Alan Arakawa is also studying options for utility ownership, and on the Big Island the Hawaii Island Energy Cooperative has formed to look into running the county’s electric grid.

The resolution must be approved by the full Council, which will next meet Jan. 27. Caldwell’s signature is not needed for a resolution to pass.

Martin said passing the resolution does not suggest that the Council is opposed to or in support of the sale of HEI to NextEra.

“The county should explore all options,” Martin said. “Not for or against any particular model, but how would we know what model to support without the type of analysis that should be done?”

In the resolution, the Council requests the assistance of the city administration, including the Department of Budget and Fiscal Services, Corporation Counsel and the Board of Water Supply, to work with the Council to explore the feasibility of municipal ownership of the electrical utility on Oahu.

The administration objected to its departments helping the Council with its investigation.

“We’re not opposed to the City Council taking on the study,” said city Managing Director Roy Amemiya, “but we didn’t feel our departments should necessarily participate.”

Amemiya said the city could not afford to offer an alternative to NextEra based on the $4.3 billion price the company has offered to pay for the state utility.

“I don’t think we can afford to do it,” Amemiya said. “I don’t believe we have the expertise. The city has a lot of irons in the fire involved with two of the largest infrastructure projects that the state has ever taken on — one with rail, one with the sewer infrastructure upgrades. Once the rail is completed, we will also have to run the rail system. All of these projects make us feel that this is not an undertaking the city should embark on.”