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NextEra may drop isle bid to pursue Texas deal

NextEra Energy Inc.’s proposed $4.3 billion takeover of Hawaiian Electric Industries Inc. is looking less and less likely as the company gets a new chance to buy the largest power distributor in Texas, analysts said.

This month’s collapse of a rival bid for the Oncor Electric unit of Energy Future Holdings Corp. might prompt NextEra, North America’s largest generator of wind and solar power, to dump the Hawaii deal for a second pass at Oncor. NextEra can exit the 18-month-old deal after June 3 by paying the utility and bank owner about $95 million, Hawaiian Electric Chief Financial Officer James Ajello told investors May 4. Hawaii utility regulators haven’t scheduled a vote on the 18-month-old offer, which has come under criticism in the state.

Opponents have questioned NextEra’s commitment to Hawaii’s goal of 100 percent renewable power by 2045 and dislike ceding control to the Florida-based company.

“These sustainability and governance concerns may trump any potential concessions NextEra is willing to offer to sweeten the deal,” Bloomberg Intelligence analyst Stacy Nemeroff wrote in research published Tuesday. “NextEra may decide to take the loss so that it can move forward with other potential acquisitions.”

Tepid demand

Tepid power demand and mounting costs have spurred a flurry of North American utility mergers. Since last year, companies have announced $80.8 billion of U.S. utility takeovers, with 2015 being the biggest year since 2011, according to data compiled by Bloomberg.

NextEra recently renewed its interest in buying Oncor, two people familiar with the talks said May 12 on condition they not be named discussing private negotiations.

Oncor’s power system is “a great strategic fit” for NextEra, which can afford to walk away “from the uphill battle in Hawaii,” Shahriar Pourreza, a New York-based analyst for Guggenheim Securities LLC wrote in research published Tuesday.

Darren Pai, a spokesman for Hawaiian Electric, had no immediate comment Tuesday. A representatives of NextEra didn’t immediately return calls seeking comment. Allan Koenig, an Energy Future Holdings spokesman, declined to comment.

Withdrawn bid

A group led by Hunt Consolidated Inc. on May 18 withdrew from its agreement to buy Oncor after regulators said ratepayers may share in future tax savings arising from the deal. That put the company, which has about 119,000 miles of lines and more than 3 million meters, back on the market.

NextEra was once considered the front-runner for Oncor. It expressed renewed interest after Oncor parent Energy Future replaced its bankruptcy reorganization plan May 1, according to the people, who asked not to be named discussing private negotiations.

The change freed Oncor to be pursued by other bidders, Chief Executive Officer Robert Shapard said at a Texas regulatory hearing May 4. “We are to work with all parties interested in buying the company at this point,” Shapard said at the hearing.

NextEra Chairman and Chief Executive Officer James Robo said in December 2014 that Hawaiian Electric, which serves 95 per- cent of the state’s population, could be a testing ground for a transition from fossil fuels to power generated from the sun and wind.

18 responses to “NextEra may drop isle bid to pursue Texas deal”

  1. allie says:

    It is clear that this sale is dead. That has been clear for some weeks.

  2. McCully says:

    I bet Connie and her cronies will not be happy if this deal falls through.

  3. fiveo says:

    Good riddance to NextEra. As far as Connie and her cronies, they will continue to do well, no matter what. As far as HECO, it will continue to go downhill as they refuse to
    change and adopt to changing times.

  4. justmyview371 says:

    Make you plane reservations early before all the flights are sold to the other Mainland companies kicked out of Hawaii.

  5. wiliki says:

    They’ve put too much into the Hawaii deal. But after June 3…

  6. notapp says:

    This story is pretty ridiculous, the two deals are unrelated. Maybe someone should actually ask Next Era or follow the company before making implications. This deal was being considered a long time ago by Next Era and now they they have an opportunity to jump back onto the bidding on the failed transmission company. The Next era merger is in no way related and is not an eighter or situation. From what I’ve read is Hunt backed out because they didn’t like the terms the PUC put on the acquisition, allowing Next Era to step back in with their previous plans. How someone jumps to the conclusion that it will affect the Hawaii merger is just bad reporting,

  7. inlanikai says:

    Buh-bye!

  8. saywhatyouthink says:

    Most of you assume the PUC acts in the best interests of ratepayers. Wrong, they are controlled by Ige and the rest of the democratic party leadership who have already been bought off by Heco and Nextera. In fact Heco is one of the largest contributors to the democratic party of Hawaii, do you really think they didn’t run this up the Ige flag pole before announcing the sale to the public? Ige and Iwase are putting on some Kabuki theater for you all. The PUC will approve the sale, just watch.

  9. justmyview371 says:

    Goodbye already!

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