NextEra deal shorts consumers, advocate says
The state Consumer Advocate said Thursday that NextEra Energy Inc. should offer four times the amount of savings it is currently promising customers if its purchase of Hawaiian ElectricIndustries is approved.
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The state Consumer Advocate said Thursday that NextEra Energy Inc. should offer four times the amount of savings it is currently promising customers if its purchase of Hawaiian Electric Industries is approved.
“We’re looking at about roughly $250 million over four years in rate reductions,” said Consumer Advocate Jeff Ono. “We think it’s reasonable.”
In NextEra’s application to buy Hawaiian Electric Industries for $4.3 billion, which is being reviewed by the Public Utilities Commission, the company is offering a $60 million credit to customers over four years and vowed to not seek a rate increase over that
period of time.
Rob Gould, spokesman for NextEra, said the company stands behind its commitment.
“We certainly stand behind our number, which we believe is proportionately better when compared with other like mergers in recent years,” Gould said. “Furthermore, the $60 million is only the tip of the iceberg in terms of the roughly $1 billion that customers of the Hawaiian Electric Cos. and the State of Hawaii stand to benefit from should this merger go forward.”
NextEra said the merger would bring $1 billion to the state’s economy from customers reinvesting $465 million in projected savings. The savings would come from lower future costs of service and lower financing costs compared with HEI.
Michael Brosch, president of Utilitech Inc., a Missouri-based utility consultant, testified on behalf of the Consumer Advocate on Thursday at the 15th hearing hosted by the PUC to review NextEra’s purchase of Hawaii’s largest electrical utility. Brosch said customers should be receiving
$250 million in rate relief or approximately $62 million annually over four years.
Brosch was among seven expert witnesses testifying on behalf of the Consumer Advocate.
Ono has said that the rate reduction is among many recommended conditions that need to be met for the application to be in the public interest.
Other conditions Ono said should be added include a $110 million investment fund for transformational projects across the state and the development of specific programs that will directly benefit low-income customers.
Mark Glick, administrator of the Hawaii State Energy Office, also testified Thursday. Glick said NextEra commitments to customer savings were detailed but that “virtually everything but those lack clarity specificity.”
“We still have some concerns about the lack of detail, lack of enforcement and the conditional nature of many of the commitments,” Glick said. “Many of those concerns have not been addressed.”
The PUC continues to hold hearings at a Blaisdell Center conference room to review the proposed sale of HEI. The trial-like hearings from 9:30 a.m. to 5 p.m. are open to the public and will continue until at least Wednesday. PUC approval is needed for the sale to close.