Lau hopes PUC is sold on NextEra
Hawaiian Electric Industries CEO Connie Lau said Wednesday she is hopeful state regulators will decide that the sale of HEI to Florida-based NextEra Energy Inc. will provide significant benefits for customers.
Lau spoke during HEI’s annual shareholder meeting, as investors voiced their concerns about the success of the pending change in ownership. Shareholders asked Lau why NextEra’s $4.3 billion purchase of HEI would be a good move, how to get Gov. David Ige to favor the sale, and what HEI’s contingency plan was if regulators denied the application.
“We continue to believe NextEra Energy is the right partner,” Lau said. “(NextEra) brings a powerful combination of renewable energy experience … and financial strength necessary for advancing and modernizing our infrastructure and achieving Hawaii’s 100 percent renewable energy goal.”
Earnings report
Before the shareholder meeting, HEI — the parent company for the state’s major utilities Hawaiian Electric Co., Maui Electric Co. and Hawaii Electric Light, and American Savings Bank — said first quarter profit was $32.4 million, or 30 cents per share, compared with $31.9 million, or 31 cents a share, for the first quarter of 2015. Total revenue for HEI was $551 million compared to $638 million in the first quarter 2015.
The company spent $1.6 million on costs related to its sale to NextEra in the first quarter of 2016. The company paid $4.7 million on costs related to the sale in the first quarter of 2015.
The state Public Utilities Commission is reviewing the application after final documents were filed Monday. The sale was announced in December 2014.
David Smith of Kaimuki, 72, said he was concerned about HEI’s ‘Plan B’ if state regulators didn’t approve the sale. Smith said he has been a stockholder for 30 years.
“Everything is going to change if the PUC doesn’t approve this thing,” Smith said. “We go back to square one.”
Lau said that HEI’s companies have operated on a stand-alone basis throughout the proceedings and would continue to do so if NextEra’s buyout of HEI wasn’t approved.
“We will still be the same company after that,” Lau said. “We would still continue forward.”
Amy Monk of Hawaii Kai, 63, echoed Smith’s concern about what would happen if the sale wasn’t approved.
Either party has the right to terminate the agreement if the merger is not consummated by June 3. Both parties are bound by a $90 million termination fee. HEI would have been liable to pay the fee to NextEra if the company had failed to get shareholder approval. HEI shareholders approved the sale in June 2015. NextEra is liable to pay it if the sale fails to get regulatory approval.
“We would be owed a termination fee by NextEra, if they decided to walk,” Lau said.
Ige opposed
One shareholder asked Jeff Watanabe, chairman of HEI’s board of directors, what it would take to get the governor’s approval.
“Why can’t we get the governor on board? What is it going to take? Money?” a shareholder asked.
The room laughed. Watanabe said he couldn’t answer the question.
Ige first announced his opposition to the sale in July and has remained opposed throughout the PUC proceeding.
“The governor’s opposition to this transaction occurred prior to the application already being filed,” Watanabe said. “I can’t answer the question (of how to get Ige on board). I don’t know. We stay in touch. We keep them briefed.”
Watanabe also addressed the concern that Hawaii’s largest electric utility would be owned by a Florida-based company, saying other Hawaii companies, such as First Hawaiian Bank, are owned by people outside the state.
“The question really, to me at least … is about culture of the local company and its management,” Watanabe said. “It’s not the question of who owns the stock.”
Lau said NextEra will strengthen and accelerate Hawaii’s renewable energy goals because NextEra is a leading renewable energy company and major supplier of solar and wind power. Lau also said the company has a track record for lowering costs. She said that when the sale was announced, rates at NextEra’s electric utility were 22 percent lower than national average and that they are about 30 percent below the national average now.
Lau also said shareholders will benefit if the sale is approved, as they will get $37.07 for each HEI share, based on Tuesday’s price. When the sale was first announced, HEI shareholders were looking at a payoff of $33.50 a share. HEI shares closed at $33.16 Wednesday, up 42 cents.
In addition to working on the sale, Lau said, “we continued to keep our core companies healthy.”
Trading halted
HEI said Hawaiian Electric Co., its electric utility subsidiary, reported a profit of $25.4 million in the first quarter of 2016 compared to $26.9 million in the first quarter of 2015. HEI said the $1.5 million decline was mainly because of increasing investments in its service, system and integration of more renewable energy. Total electric utility revenue for the first quarter was $482 million compared to $573 million the period prior. A drop in oil prices in the last year has led to lower electric bills. In March 2015, the typical Oahu residential electric bill was $150.18. In March of this year the bill was $123.06.
Net income for American Savings Bank, HEI’s bank subsidiary, declined 6 percent in the first quarter as it increased its provision for potential loan losses and endured higher expenses. Its earnings fell to $12.7 million from $13.5 million in the year-earlier quarter.
The New York Stock Exchange halted trading of HEI stock for about 45 minutes on Wednesday.
Jim Ajello, HEI’s chief financial officer, said the pause occurred because its earnings results differed from market expectations and because the company made a series of regulatory filings including one related to a planned spinoff of its bank. Hawaiian Electric released earnings during trading hours because of a scheduling conflict, the company said. Typically earnings statements are issued before or after market hours.
HEI’s explanation corrected the speculation that news related to its proposed sale to NextEra may have been pending.
“It was unusual, yes,” Paul Patterson, an analyst for Glenrock Associates LLC, said of the trading halt. “But given the explanation, it was understandable.”
Bloomberg News contributed to this story.
43 responses to “Lau hopes PUC is sold on NextEra”
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Of course she’s in favor. She takes home $10 million plus.
Connie wants her money!
She just wants her money. Nothing else. She don’t care if Hawaii gets screwed over.
Ditto those comments. Unfortunately greed overcomes everything in life, especially hers.
HEI management has a duty to its shareholders and are using their best judgment to look for ways to keep the business viable for the long term. Many locals are longtime owners of Hawaiian Electric stock and it would be bad for our community if they lose their investment.
idio-t
We know that ub ub boo is on the side of the 1%. He supports cladwell, the city council, the developers, the contractors, the unions, the SuperPACs, and the Kakaako Enclave country club.
True many kupuna have part of their retirement in HECO dividends.
I’ve gone to Puerto Rican bonds for the higher interest rate. They’ve defaulted on some interest payments. But the returns are still good. I’m not selling.
Congress should just bail them out like they have done with Wall Street. Don’t Republicans believe in fair play?
tool
Connie Lau is one of the worst examples of the local good ol’ boy/girl system. Promoted for her connection to the power brokers like Jeff Watanabe, she never said boo about HECO until this deal cae along. She cares nothing about service to her customers, efficient operation of the company or the welfare of its employees. She cares only about her windfall bonus.
Of course not, she stands to take home serious $$
Yes, as ASB Bank executive who was alleged to cover up the theft of $900K of Ada Lim, her bank paid off Lim and a former bank employee big money to drop the civil suits and keep quiet from making any more public statements against Lau.
“Lau hopes PUC is sold on NextEra?” Well, “ratepayers” hope the PUC doesn’t sell out. Period.
It comes down to how much “monopoly operator tax” Nextera is willing to pay to the democratic party of Hawaii. That is only issue the PUC will consider when deciding this matter.
The PUC should table their decision. Lets see if Nexterror walks as they claim they will.
Heard that NextEra is working with Helix Electric on construction projects, and Helix is one of the largest non-union electrical contractors in the nation. I guess NextEra is not committed to IBEW even though IBEW is supporting the merger.
They all talk just to get what they want. If the deal goes through, NextEra will do what ever they want and screw Hawaii over.
shouldn’t mater if Helix wages in the mainland are good wherever the workers are located.
i just want my.31 cents per share dividend
That won’t help you much when NextEra lobbies for a $100 a month connection fee and $1 a kilowatt charge.
sure they could lobby for it. but it would never get approved.
What makes you think that? Mankind doesn’t have measuring instruments capable of determining the miniscule size of the former PUC chairmens’ spines before Morita. Just because we have had a vastly abnormal change, aka, chairwoman and man who actually have spines does not mean we will always, and history suggests we are certainly going to get a spineless sycophant who will approve anything they want.
I agree. Last I saw, it was 70 connection fee. Very reasonable.
Ever wonder why the PUC chair is always a former democratic lawmaker? Like all state boards, the PUC exists only to insulate the real decision makers (democratic party leadership) from public criticism.
Keep voting for the same long serving corrupt (D) people, you’re getting exactly what you deserve.
NextEra’s Standard Disclaimer – Why NextEra is not to be trusted in anything it says it will do
The NextEra disclaimer that appears IN FINE PRINT on every one of its ads and TV commercials says it all – i.e,, WHY NEXTERA IS NOT TO BE TRUSTED IN ANYTHING IT SAYS OR PROMISES IT WILL DO.
“Disclaimer
Forward Looking Statements
This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are typically identified by words or phrases such as “may,” “will,” “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “predict,” and “target” and other words and terms of similar meaning. Forward-looking statements involve estimates, expectations, projections, goals, forecasts, assumptions, risks and uncertainties. NEE and HEI caution readers that any forward-looking statement is not a guarantee of future performance and that actual results could differ materially from those contained in any forward-looking statement. Such forward-looking statements include, but are not limited to, statements about the anticipated benefits of the proposed merger involving NEE and HEI, including future financial or operating results of NEE or HEI, NEE’s or HEI’s plans, objectives, expectations or intentions, the expected timing of completion of the transaction, the value, as of the completion of the merger or spin-off of HEI’s bank subsidiary or as of any other date in the future, of any consideration to be received in the merger or the spin-off in the form of stock or any other security, and other statements that are not historical facts. Important factors that could cause actual results to differ materially from those indicated by any such forward-looking statements include risks and uncertainties …”
is this your first time you’ve seen a forward looking statement? pretty much your typical disclaimer. bad example of trying to prove a conspiracy theory especially when there are many other tasty tidbits around.
I agree. We have a clicken little here. “lies” and the sky is falling. It’s a disclaimer.
Yeah, Lau wants her windfall now.
First Hawaiian Bank is now up for sale. Work is feverishly going on to make that happen. Why make such a comparison? Does that mean that HECO will be up for sale one day by Nextera when it becomes convenient or profitable for them to do so?
“The governor’s opposition to this transaction occurred prior to the application already being filed,” Watanabe said. “I can’t answer the question (of how to get Ige on board). I don’t know. We stay in touch. We keep them briefed.”
Curious as to why the governor continued his opposition to the sale well into the process of the PUC conducting its reviews. Furthermore, it is highly unusual for him to interject his views while the reviews are underway. Might it be that his in-house advisor is not be providing him clear and objective analysis.
Or that’s he’s an engineer and can figure out this deal is terrible?
Neither does it seem that the puc is getting clear and objective analysis from its staff.
Maybe the governor and his staff should get together with the puc staff and figure things out? The Puc has the numbers from both HECO and NextEra.
It doesn’t take a rocket scientist to figure out this deal is awful for Hawaii.
But you’re paid to shill for it.
Or it could be that Ige is just lying to the public. If he really wanted to kill this deal, it would be dead.
if anyone knew the condition heco is in you would be begging for the nextera merger. granted, it is hard to see from the outside but obvious to anyone who has the benefit to see from the inside. too many people commenting have absolutely no idea how bad it is but that’s because they don’t have all the facts. not even the puc has all the facts as heco straddles the very fine line of protecting itself versus encouraging the merger. there is a very good reason why even some employees whose job may be on the line two years after the merger would actually support it. don’t be like so many of the rail supporters who were fooled by the super pacs and thought they knew better only to find out too late what a scam they fell for. this has the same feel and many strings are being pulled by the solar companies to get your support when they are really only looking out for themselves. while many solar incentives benefit the ratepayers don’t be conned into thinking the solar companies are out there just for you.
If this deal falls though, Lau may be fired.
It’s pretty ludicrous to suggest Nextera would be a better partner. What partner, they want to buy HECO. And, what could Nextera do for HECO they could not do for themselves. It shows incompetence and malfeasance at every level including corporate governance..
Of course the PUC will recommend it because they are so corrupt. The only reason Next Era wants HECO is because Hawaii has the highest electric rates and Next Era wants to keep it that way.
Lau doesn’t hope they’re sold, she knows the democrats are bought and paid for and they control the PUC. Heco gives the Hawaii democratic party several million every year through their super pac, Nextera will give them even more, last year they gave Florida lawmakers 9 million.
This deal was approved before Connie even announced it to the public. Ige and Iwase are putting on some of their best Kabuki theater for you all, enjoy the show.
What will you say if Iwase kills the deal?
Just sharing what I heard from someone that NexEra is a BIG Republican contributor. Could that be one of the reasons that Governor Ige is opposed to this merger with HECO?
Connie Lau is greedy and is looking at that BIG $10 million windfall if the merger goes through. She should give it to the shareholders!!!
If it’s true that Connie Lau will get fired if the deal doesn’t go through, yippeeeeeee!!!
NextEra has spent truckloads of money on politicians in Florida and Georgia.
Expect them to do the same here.
And regardless of your political lean, NextEra as a publicly traded utility attempting to generate abnormally high returns does not pose a good fit for Hawaii. Especially when their business plan they so point to in Florida is completely non-replicable in Hawaii. They are lying to us. And they expect us to believe it.
HECO did the same thing here. Passing on the profits to the shareholders while not making any improvements. They themselves say the system is dangerous.
Grid saturation being the latest bs, not to mention rotting power poles, terrible customer service, tremendous waste, payoffs, etc