PUC rejects NextEra’s purchase of Hawaiian Electric
STAR-ADVERTISER / JULY 2010
The HECO office on Ward Avenue. The state Public Utilities Commission today announced their decision regarding NextEra Energy Inc.’s proposed $4.3 billion purchase of Hawaiian Electric Industries Inc.
Hawaii’s Public Utilities Commission said today it has rejected NextEra Energy Inc.’s proposed $4.3 billion purchase of Hawaiian Electric Industries Inc.
The vote was 2-0 with PUC Chairman Randy Iwase and Commissioner Lorraine Akiba voting to reject the sale. Commissioner Tom Gorak abstained. PUC approval was needed for the companies to close the deal.
In a brief joint statement, NextEra and HEI said, “We are in receipt of today’s PUC order and are currently reviewing it.”
NextEra, based in Juno Beach, Fla., announced in December 2014 its plan to run Hawaii’s largest utility which provides power to 95 percent of Hawaii residents.
Hawaiian Electric Industries includes Hawaiian Electric Co. on Oahu, Maui Electric Co. and Hawaii Electric Light Co. on the Big Island. The original plan called for HEI’s bank subsidiary, American Savings Bank, to be spun off and run as a stand-alone company.
NextEra conducted a 19-month campaign to win approval of the deal. NextEra argued it was a better alternative for Hawaii because it could offer lower rates and a quicker path to the state’s goal of achieving 100 percent renewable electricity production. NextEra promised to lower electric bills — the highest in the nation — by about $70 a year over the next five years and to not lay off employees for two years.
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Opponents of the sale — including Gov. David Ige, environmental groups and solar power companies — argued the state’s largest utility should not be run by company based in Florida, which would view Hawaii as a small part of its operations. They also questioned NextEra’s commitment to 100 percent renewable energy, especially in light of its plan to convert power plants to liquefied natural gas and the small amount of rooftop solar in use in Florida.
Parties involved in the case could file a motion with the PUC for reconsideration or file a motion to appeal the decision with the Hawaii Supreme Court.
The PUC’s decision came just weeks after Ige changed the makeup of the three-member commission. On June 29, Ige appointed Gorak, PUC chief counsel, to replace outgoing Commissioner Michael Champley. The governor said Gorak’s views were more aligned with Ige’s. State senators have questioned whether Ige had the authority to make that change without the Senate approval.
State Attorney General Doug Chin said in a formal opinion today that Hawaii’s Constitution authorized Ige to appoint Gorak.
The PUC said Gorak supported the decision’s conclusion but abstained because he believes that the focus should be on the decision and electric utility’s path toward achieving the state’s renewable energy goals, and not about the controversy regarding his appointment.
Immediately after the PUC order was issued today, former PUC Chairwoman Mina Morita filed a complaint in First Circuit Court challenging the legality of Ige’s appointment of Gorak.
The PUC said Gorak supported the decision to reject NextEra’s purchase of HEI but abstained because he believes that the focus should be on the substance of the decision as well as HECO’s path toward achieving the state’s renewable energy goals, and not about the controversy regarding his appointment.
The PUC said Gorak’s vote was not necessary because the order had the support of the other two commissioners.
The state agency said that it “emphasized” that it is not preventing HEI from seeking another partner, or from renewing discussions with NextEra. The PUC said it included guidance on key elements that would help future companies looking to buy HEI’s electric utilities.
The PUC said despite NextEra proving that it can perform the services that are currently offered by HEI’s electric utilities, the Florida-bases company failed to show that the deal was in the public interest.
The commission said the benefits offered by NextEra to ratepayers were “inadequate and uncertain;” NextEra failed to offer enough protection to the ratepayers to offset the risk’s associated with its complex corporate structure; NextEra failed to offer commitments tailored to Hawaii’s environmental and clean-energy goals; the company failed to guarantee that Hawaii would not suffer after the change in corporate structure; and failed to demonstrate that the energy market would be fair for other companies looking to compete with NextEra in Hawaii.
The PUC said NextEra’s promises of $60 million in rate credits and $1 billion in statewide benefits were too conditional or unrealistic.
“There was an unacceptable risk that ratepayers may not ultimately enjoy the entire $60 million in rate credits, if at all, and/or the projected benefits of a rate case moratorium,” the PUC said. “The commission observed that these calculations were based on assumptions and/or unrealistic expectations about the future that were vigorously challenged in the proceeding. Additionally, applicants had not offered any reliable means to track these estimated benefits to determine whether or not they actually occurred, nor did they propose an enforcement or penalty mechanism, in the event that such benefits did not result.”
“Unlike the HECO companies, NextEra is a large corporate family, with hundreds of affiliates and subsidiaries,” the PUC said. “While the commission believed that its existing regulatory power would offer ratepayers some protection, primarily through preventing various types of cost-recovery by NextEra, it expressed serious concern over the risk posed by the potential bankruptcy of NextEra and/or one of its many subsidiaries or affiliates.”
PUC votes to not approve the HECO Companies and NextEra Energy's joint application for change of control by Honolulu Star-Advertiser on Scribd
PUC release supplement – July 15 by Honolulu Star-Advertiser on Scribd
89 responses to “PUC rejects NextEra’s purchase of Hawaiian Electric”
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why would the PUC ever approve the deal? NextEra wants to lower rates. Of course the PUC says hell no! We want to make money(aka kick back from HECO).
if you think it’s about kickbacks cholo would guarantee you nextera has far better kickbacks to offer than heco ever could. another clueless poster.
Ah, the NextError Cheerleading Corp is going to be in tears as their pay per post drops to nothing.
I’ve raised for months the issue of how NextEra’s savings plan relies on a system of assets that does not exist in Hawaii and cannot be replicated. None of the NextError Cheerleading Corp ever wanted to address that problem.
Good for the PUC. We don’t need NextEra’s poison. They’re a good company to own the stock of, but they’re a terrible company to be a customer of.
true…too many questions including the poor judgment of Connie Lau in trying to rush into this bad agreement.
You mean $1 a month?
With a plan that has no functional ability to be replicated in Hawaii?
How about this, why would a publicly traded firm, willingly investment billions into a shrinking market and then reduce prices?
If you think that NextEra actually wanted to cut prices, I have tropical beachfront property to sell you in Alberta, Canada.
U got that right. Next era ain’t for roof top solar!
And HECO is? I’m not saying Nextera is either but we all quickly forget all the problems with HECO.
In the absence of facts, the low IQ ones always revert to using conspiracy theories and “big bad” politicians and corporations to spout this nonsense. Now, would you like to showcase your low IQ further by providing more conspiracy theories? Otherwise, go crawl back into your cave or go back to school.
Wow, Carnac the Magnificent have spoken! Now we know why he was in favor of the deal. Poor Carnac, his HEI stocks is now worthless.
Hey, low IQ, if you bothered to think, which you’re obviously incapable of, you would realize that what this guy has posted is accuse people of engaging in criminal activities. Why, if he have the facts, not take it to law enforcement instead of putting up his s….t here? You know why? Because he’s as s…..d as you….OK, no one is as s…..d as you.
By the way, if you know how, look up the stock price.
oxtail01, that’s really interesting. It seems like the market was expecting the deal to through based on the past 5 days of trading. But the after market sell off doesn’t appear to be as bad as I thought it would be.
Choyd, my take is that the market hasn’t had time to digest everything yet as the decision happened before the weekend. As you know, utilities have done well as defensive, dividend paying stocks has seen huge increase. Maybe it’ll take a little time but the trend will be to the downside as HEI is richly priced already and their dividend payout ratio is high.
wow lau lau………no go way mad just go way
NO SURPRISE IN THE DECISION..
Good. Now, let’s fix Hawaiian Electric.
yeah, reduce Constance Lau’s salary to a 3rd. It’s a rip off having to pay the leader such an exorbitant amount of money.
What does she do anyway to earn that huge compensation package?
Why pick on her? If not her, would be someone else. She has done well in her career as a woman and Asian and is a good role model for our young people.
Please provide a comparative analysis on why you think her pay is a ripoff. I actually think her direct salary is within reason as most of her upside is tied to stock options. I myself have done very well with HECO stocks the last few years so if she made a ton out of it, so did thousands of others. Now that this transaction is dead, expect the stock price to dive lower (sell your shares now).
Many locals are long time owners of Hawaiian Electric stock. Hopefully we don’t take too big a hit on Monday.
ukuleleblue says: “Many locals are long time owners of Hawaiian Electric stock. Hopefully we….”
We?
HE closed at $32.48 on Friday. Down 1.2% in after hours trading. Wonder what Monday will bring?
got that right. highway robbery.
It’s doable but until the entire incompetent upper management is replaced with personnel who actually know how to run a business it won’t happen. The only thing HECO’s upper management is capable of doing well is fondling each other’s balls.
Guess you don’t fondle yours? Something’s wrong with you if you haven’t figured out how to fondle it well.
I’ll fondle myself just quite well thank you. You can even watch if you’d like. What I don’t do is fondle other’s so if you were looking for a freebie you’re out of luck.
Well, you must have fondled HECO management since you know they fondle well. Or did you just watch and fondle yourself?
wow oxtail01 what’s with your interest in all the fondling of balls? cholo could tell that was a figure of speech, did you not get that? English is cholo’s 2nd language and still able to pick that up.
Cholo, it’s called sarcasm.
and if it does help you sleep better at night cholo has fondled himself before. maybe not as much as FAJA. anyways since you seem enamored with the whole fondling thing. to each his own.
oh you did recognize it! cholo is happy for you!
Probably not going to happen until the whole “regulated utility” model which gives HECO the monopoly is gutted.
The best would be to use oahu taxpayer money stolen for rail money and pay off HECO at a reasonable amount (NextEra’s $10 million offer to pay off Lau is NOT reasonable. $250,000 is more than reasonable) so that the power utility is co-op owned by Oahu taxpayers. The key is to put in place management that looks out for the future of Oahu’s energy grid needs, makes a decent salary but NOT the obscene salary of Lau and other HECO execs. The future will be a smart-grid that will allow ALL Oahu homeowners to have PV panels that they pay (NOT the scam program that used bonds to pay for homeowners PVs), Utility level storage such as the latest flywheel energy storage and some other form of large energy storage like pumping water up into multi level Wahiawa reservoir and then using a turbine to generate electricity from water running to a lower level. PV is way “cleaner” than windmills and the best is to use wasted space on private homeowners roofs. The only reason why HECO shut that down is because they business model is making big profits on generating electricity from fossil fuels. The co-op will only be successful is if the intense pressure to make big profits to HECO execs and shareholders is gone and the management of this new coop is really smart and capable people with serious electrical generation and power distribution knowledge who are not greedy incompetent clowns who will get paid well but not the obscene salaries Connie and the rest make; and deal with unions that will need front line electrical lineman but if everything is going as planned, will require less workers since much of a modern power grid will be automated and require less “office” employees.
All that typing yet you really have no clue how this all works in reality. ALL of your proposed solutions have severe issues whether they be financial, logistical, etc. There are valid reasons why they are not in use. There’s not nearly enough space here to explain this but I’ll tell you what the consequences is of everyone having PV on their roof — nightly outages. It doesn’t take a rocket scientist to know why but if you know a little about energy production and distribution and how our grid works you should figure it out yourself.
I agree.
I never said fossil fuel electrical generation would be eliminated on Oahu only reduced. And why is it that HECO originally proposed very large PV “farms” on Oahu taking valuable open space land to generate electricity, yet increased homeowner PV generation would cause harm to Oahu’s electrical grid? Why would massive HECO or NextERA approved PV farms NOT negatively impact a smart grid as well? Rhetorical question. What you sound like is big brother that everyone else is too stoopid or ignorant to figure things out with people like Mufi or Kirk who have to constantly make the “big” decisions. At no time did I ever imply or suggest PV was the end “soluton” only that it is ONE piece in a larger puzzle to solve Oahu’s future energy needs that is far superior to massive windmills in the ocean or on land. Unless Oahu goes nuclear, fossil fuel generation will NEVER go away, but what Oahu can do is greatly reduce the percentage in which it is dependent on this type of generation and electricity from the sun is free but of course it has its limitations. I did not want to explain every obvious detail that you seem to assume I did not consider but that is okay I don’t need your validation. If you think you are the only one with the correction solution then submit in your posts so that others can be enlightened to help find a solution because it is clear HECO or Next ERA IS THE PROBLEM. You also seemed to overlook my key point is that HECO is NOT looking out on behalf of the public rather have used their monopoly to make big profits for their execs and shareholders. You want to dispute that point? Anything that can take the selfish, greedy motive out of the “energy equation” for Oahu electrical users would be welcome in your comments.
Inverse, I agree with you, but I would go farther. Solar might be all we need. Electric storage is coming, the only question is if it will be small-scale, like Elon Musk’s Power Wall, or large scale at the utility level. Probably a combination of both.
You need to start with removing the top, these are people who don’t want to lead the company into the future. They were all for the sale because they know that they are incapable of leading HECO into the future and dealing with the problems that have plagued HECO for some time now. HECO needs leaders that know the utility business, not just the banking business. They need to remove the military leadership they have hired in the past, these people know nothing about the utility business or the culture of Hawaii business, they think they are still in the military.
AS for the problems that have plagued HECO they need leaders who can deal with most the highly paid unproductive workers.
Looks like the Governor’s change in commissioners resulted in the ruling he wanted.
looks like saywhatyouthink shouldn’t have….
Stay tuned,it’s not over yet.
And if NextEra doesn’t appeal? What will you say then?
Have you ever admitted you were wrong?
Guess better the devil you know than the devil you don’t know
Actually, we do know that devil. Nextera can be studied in Georgia and Florida. You have to have gotten a very large brown envelope to overlook how much they screwed consumers there.
Awe to bad for the lobbyists who lost…give back your fees!
I hope the State Judiciary is able to clear their dockets to deal with what I am guessing might be a blizzard of paper following the decision. I smell a lot of billable hours. Those six minute chunks really add up in a case like this.
Of course, NextEra might possibly say “Ok,” pack up their tents and fly away; choosing to cut their losses. There are however, a lot of other people in town who stand to lose a pretty big payday. I doubt they will “…go gentle into that good night.”
Morita needs to obtain the puc staff report prepared by its own engineers from data of nextera in her court case. The public needs to know how the puc came to its decision.
Conie Lau, as the cheerleader of this transaction, should immediately resign as her judgment, credibility and influence have now shown to be seriously flawed. She championed this deal before her board; the board must now accept her resignation. It’s the only honorable course for her to take. Will she have the integrity to do so? We shall find out.
Change is coming. This is the only way you fix the broken trust.
Feel sorry for Connie, she just lost a $10M check. Ouch !
Doubt that. The board will probably blame Governor Ige and the puc for that decision. And if we don’t get another offer, it’s likely because of this decision.
Good Job PUC. Honestly was shocked that they actually had the guts to tell them to no.
Keep Hawaii, Hawaii
This is a good decision by the PUC.
Lots of prayers have been answered by the PUC’s decision today !!! All I have to say is “YES” !!!
I didn’t realize the “commission” is only three people. In charge of a $4,300,000,000 decision? Interesting.
And only two participated in the decision.
You mean two people voted.
Large numbers of PUC staff participated, in addition to the large turnout by the public at the hearings that went into the decision.
Although this was a very complicated issue, this seems like a good thing to me, give that NextEra’s track record in Florida is duplicitous at best. See this quote from Civil Beat 2914. “Earlier this month, Florida regulators approved proposals to gut Florida’s energy-efficiency goals and end its solar rebates by the end of 2015, giving the investor-owned utilities virtually everything they wanted” the Tampa Bay Times reported. The lobbying effort by Florida Power & Light (Now NextEra), Tampa Electric and Duke Energy was viewed by some as an aggressive attempt to weaken the rooftop solar market, which has eroded the utilities’ customer bases.”
And yes they did their best to undermine any green efforts from their competition. I don’t believe their promise of lower rates and achievable green energy goals. So – glad of this decision.
Now the question is – what or who will replace them, as HECO seems determined to sell. I hope that we seriously consider a state-owned utility….
as bad as heco is, a municipal or co-op would just make our rates higher. no thank you. cholo wants lower rates.
We should seriously consider a non-profit.
I think a state run utility is a terrible idea, but when we consider that HEI had over a billion in utility profits over the past decade and didn’t bother spending them on customer upgrades, well, the whole non-profit model looks increasingly better and better.
is there a way HECO’s management can be gutted and replaced with a new, proficient staff as was suggested? cholo has family and friends in HECO and they all say the company is beyond poorly managed. there are utterly disgusting stories of company waste and inefficiencies. maybe an outside auditor can check the books. cholo’s not sure but believes the company could be saved if it had different management.
Cholo, your family members and friends are probably major parts of the whole problem with HECO. Really, for them to grumble about the hands that feed them so generously is pretty hypocritical.
KIUC is a CO-OP. doesn’t contribute to state taxes, have shareholders to pay, and gets great loan deals from the federal government (tax payers) and still has the highest rates in the state. Is that a good idea?
I find the number of posts in favor of the PUC action to be suspicious. Especially on a Friday afternoon when you don’t see many posts on any article. I’m usually not the conspiracy type, but so many favorable comments within a few minutes of the article posting online doesn’t smell right. By the way – Winter is coming…
There are some posters I’ve never seen before posting.
But then again, justmyview371, Hawaiiblogger, poncho, oxtail, cholo, inverse, Cellodad, and FAJA are somewhat regulars. islandsun and dawg are irregulars, but not new.
For the record, I’m not a supporter of today’s decision andI’ve been long time critic of HEI management as I don’t think they’ve served Hawaii well and has been progressive company. I’m a supporter of LNG as an interim transition fuel as it’s much cleaner than the oil and coal based fuels HECO depends on now for much of their generation. The days of large generating units, especially in Hawaii, is dead but we are still ways away from 100% renewable which only can happen with the ability to store that energy. I support development of community based battery backed storage facilities (as battery technology and availability makes prices more reasonable) so that neighborhoods can transition off grid. The ownership of these facilities can then be the serviced communities themselves with rates based on individual power use (a true and honest pay for play system). Regulated utilities are dinosaurs left over from early days of electrical systems but no longer makes much sense.
cholo thinks if you’ve looked at past surveys the majority of people were in heavy opposition of the merger so it kind of makes sense that most of the posts here would be in favor of the PUC’s decision today. doesn’t seem suspicious to cholo.
I don’t agree. I’ve been following this proposed sale for some time, but never commented because I did not feel knowledgeable enough to contribute. I am glad though that this sale did not go through. I do not feel that NextEra was the right company due to their track record in FL. At the same time, I feel that HECO is all about profit for it’s shareholders and executives, so changes need to be made. Just not sure what those changes need to be. Surely a complicated situation and obviously not an easy fix.
Akiba’s sudden change of support gave Randy the option of allowing Gorak to abstain. Good luck with suing the Commission Nexerror.
cholo only heard rumors that she was in favor of the merger but did she actually state that at any time?
Sorry Star Advertiser, now No Can write stories that Ige was rigging the voting outcome by appointing Tom Gorak as commissioner.
Star Advertiser pro NextEra “Wop Jaws”
My,my, now I know where the Crooked Clinton supporters go when the going gets rough.
More cheap comments not worth two cents. What’s in your wallet. The Crooked Mama wants you to send money. She’s got to get plastic surgery. For some reason her nose gets longer and longer. I’ll get back with you later to remind you in case you forget.
Fox News reports Crooked Hilliary is outspending Honest Trump by 15-1 and it’s still not enough. She keeps sinking in the polls. Please, send more money.
$20/hour, free tuition no max, free medical, no deportations, Bernie VPOTUS.
Fox could tell you your head is in your A and you will believe it.
Sorry, that would be a rare occasion of Fox telling the truth.
I wonder how many excuses your family makes these days to avoid outings with you.
People who make everything political are some of the most toxic people on the planet.
I would make a comment on friends, but I doubt you have any anymore given your behavior.
So where does it go from here? Hopefully, all those at HECO who are in a position to make a meaningful change will move forward and implement positive change. It would involve a change in leadership as those currently in place got us to where we are today. For all the workers from top down they need to realize the current business model cannot continue as it has. That doesn’t mean giving up all that you have now, stand up for what you have, just don’t be against change. Change is inevitable.
Suck it Constance Lau.
Connie Lau just saw her $10 million payday from NextEra turn into “kukai.”
This was a great decision by the PUC and its leadership. NextEra did not convince the Public that the merger was a good thing for Hawaii’s future. There wasn’t enough meat to their long range energy plans that would have demonstrated lowering the costs of electricity. This was the biggest key driver in supporting the merger. I would like to commend Governor’s Ige in supporting the position of the Public. You just bought yourself an insurance policy. I believe this is a huge plus for Ige’s re-election and the people of Hawaii will not forget when they go to the polls in the next two years. Congratulations Randy Iwase, Lorraine Akiba and the staff of the PUC. The special interest groups have been put out of business. Goodbye to the ‘ole boys network.
Solar+batteries=$$$in da bank, chaching.
This was a prudent decision. Promises are easy to make but even more easily broken. I believe it’s best for Hawaii that our power provider be a local company because that facilitates more oversight by the local community. We’d have no clout over a big, FL-based corporation like NextEra.
Now, the questions of rates, solar power, etc. are really independent of this. They boil down to whether the PUC is responsive to the public’s needs or whether it’s in the power provider’s pocket. That’s a separate issue that has to be addressed specifically, with specific remedies as needed.
But I guarantee having “offshore” ownership of our power generation plants sets us up for a total lack of ANY kind of control or meaningful oversight.
I disagree. This kind of attitude precludes any company from purchasing heco.
It’s not the size of the company that counts but but the quality of its services that it provides to its customers and the respect of other companies for it in the industry. Nextera had a terrific reputation for getting things done. If we reject that, then why bother with any other company.
It seems your opinion of NextEra is in the minority, even in its home state of FL (see annsybl’s post above).
I agree with the posters above who are in favor of a nonprofit or co-op running our grid. I’m very disappointed in HECO’s insistence on putting obstacles in the way of homeowner PV, and I’m totally unconvinced that NextEra or any other giant profit-oriented corporation will serve our local needs any better. What would be their motive to do so?
That’s why we need to keep local control of our local power generation.
Bad decision. The state is stuck with a company that does not have the technological expertise to move to 100% renewable.
Okay, Lead member of the NextEra Cheer Leading Corp:
Why would a publicly traded firm, willingly investment billions into a shrinking market and then reduce prices?
You have consistently been a fan of the company, yet literally for months avoided answering that question.
I agree that the State’s 100% alternative energy goal is nuts. Ok, it is achievable for those of you lucky enough to be able to afford expensive single-family houses, but there are a lot of other people in this State.