Gov. David Ige’s administration concluded in filings Thursday that 22 days of hearings on NextEra Energy Inc.’s proposed purchase of Hawaiian Electric Industries proved the plan is a bad fit for the state.
“The hearings have confirmed: NextEra is wrong for Hawaii,” the state Office of Planning said in a filing with the Public Utilities Commission. The state Department of Business, Economic Development and Tourism added the PUC should reject NextEra’s proposal in its filing.
Several private parties involved in the PUC’s review joined the governor’s administration in opposition as they filed final arguments by Thursday’s deadline. The groups against the sale include Life of the Land, the Sierra Club, Hawaii Gas, Ulupono Initiative, Hawaii PV Coalition and The Alliance for Solar Choice.
With the submission of the final arguments, it’s now up to the three commissioners at the PUC to decide whether the $4.3 billion sale can move ahead.
The hearings focused on NextEra’s commitment to save customers $60 million and help Hawaii reach its 100 percent renewable-energy goals faster than the current electric utility; the level of control the PUC would have if the merger was approved; and NextEra’s history with residential rooftop solar at its Florida electric utility.
DBEDT said NextEra’s application failed to prove the deal was in the public interest and that the PUC should reject it.
“Rejection may be the only way to convince NextEra to finally put forward its best and final offer,” DBEDT said.
In NextEra’s application to buy HEI, 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. NextEra also 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. Groups involved in the review have critiqued this as double counting.
The Office of Planning said the savings that NextEra offers to Hawaii residents are not enough.
During the hearings, expert witnesses testifying on behalf of the state Consumer Advocate said customers should get roughly $250 million over four years in rate reductions.
Ulupono Initiative, a Hawaii-focused impact investing firm, said the $60 million commitment was far from a guarantee for customers and that the PUC should condition approval of the sale so that it requires $100 million of rate credits to customers.
Another focus of the hearings was whether there would be a loss of local control if the Florida-based company were to purchase HEI.
The Office of Planning said that it opposed the sale because NextEra would control the electrical utility’s decisions.
“HECO’s decisions will be controlled by NextEra’s executives,” the Office of Planning said.
NextEra said in its filing Thursday that HEI would remain “fully subject to the Commission’s jurisdiction, and highly responsive to the needs, preferences and aspirations of customers.”
The Office of Planning said it was also worried about the impact NextEra purchasing more electrical utilities would have on HEI and the risk that would pose to customers.
During the hearings the PUC released confidential documents that included an email where HEI CEO Connie Lau said a NextEra executive gave her the impression that the company views HEI as a “snack” on its way to a buffet of other regulated electrical utilities.
“There is no legal limit on NextEra’s appetite for acquisitions,” the Office of Planning said. Ige has said that he wants HEI to have a partner that will make Hawaii its focus.
Maintaining healthy competition in the state and how NextEra will help transform HECO’s business to be better suited for renewable energy were other major topics at the hearings.
NextEra said in its filing that it will help HEI improve its cost of service, reliability performance and financing portfolio as well as accelerate the utility to achieve the state’s 100 percent renewable-energy goal.
Ulupono Initiative said it was concerned NextEra would diminish competition in Hawaii.
“If left unchecked, NextEra Energy affiliates could use their unique position within the NextEra Energy corporate structure to ensure that their projects are selected by the Hawaiian Electric Companies, thereby making such affiliates the suppliers of choice to the detriment of competition (and ultimately price) in Hawaii,” Ulupono Initiative said.
Despite NextEra committing to accelerate HEI to its renewable-energy goal, DBEDT said the electric utility is capable of doing it on its own.
“Some parties may contend the HEI Companies cannot meet the state’s energy policies on a standalone basis,” the agency said. “DBEDT does not share this view.”
The Office of Planning said NextEra locks out opportunities, and if the PUC rejects NextEra, it opens up options for innovation as Hawaii transforms its electrical grid.
“For innovators in electricity resources, Hawaii is a supremely attractive place,” the Office of Planning said. “Opening the door to others will attract diverse options. By rejecting this transaction, the Commission can create opportunities for those options to appear.”
The Office of Planning said the root of all these problems was that HEI and NextEra put their interests before Hawaii’s.
“Never in the discussions did HEI request, let alone extract, performance promises that would make Hawaii customers better off,” the Office of Planning said. “Never did HEI shop the market for other acquirers that could make such promises, then bring them to NextEra and insist they be matched or exceeded. HEI bargained for its shareholders, not its customers. Whatever benefit NextEra now claims to be bringing is, literally, an afterthought.”
