Hawaiian Electric Co. ended its contract Tuesday to bring liquefied natural gas into the state one day after NextEra Energy Inc. walked away from its bid to buy the electrical utility’s parent company.
HECO said it canceled the contract due to the termination of the proposed merger with NextEra. State regulators last week rejected Florida-based NextEra’s $4.3 billion proposed purchase of Hawaiian Electric Industries, parent company of Hawaiian Electric Co., Maui Electric and Hawaii Electric Light Co.
The electrical utility said NextEra’s financial backing was required to bring in the liquefied natural gas (LNG) to be used for power generation and make the necessary upgrades to power plants.
“Because of the resources these specific combined projects required, one condition of the LNG contract was approval of the proposed merger with NextEra Energy,” HECO said in a press release.
Environmentalists were excited to learn that the utility withdrew its application with the state Public Utilities Commission.
“This goes to show that NextEra’s plans for Hawaii were all about LNG and committing ratepayers to a dirty energy future,” Earthjustice attorney Kylie Wager said.
Richard Wallsgrove, policy director at Blue Planet Foundation, said the organization was glad to see the LNG application withdrawn as the use of LNG was more about increasing the utility’s bottom line than advancing the state toward 100 percent renewable energy.
“It was clear from the get-go that this LNG idea was tied to the spend-a-lot-of-money-bigger-is-better business model that came with NextEra,” Wallsgrove said. “The rejection of NextEra is the rejection of the status quo and the rejection of the big fossil fuel projects in the future.”
Marti Townsend, executive director of the Sierra Club Chapter of Hawaii, said HECO abandoning LNG plans allows the utility to focus on renewable energy resources.
“This is an indication to me that HECO has gotten the message and starting to get with the commitment to get to 100 percent renewable as possible,” said Marti Townsend, executive director of the Sierra Club Chapter of Hawaii. “Thankfully, now that the nightmare is over we can now focus on achieving our dreams of actually being an island community that doesn’t rely on imported fossil fuels.”
The LNG application included the utility’s contract with Fortis Hawaii Energy Inc., plans to modify Kahe Power Plant to use natural gas, and a waiver from competitive bidding to upgrade the plant.
HECO said it will remain focused on stabilizing and reducing energy costs while becoming more innovative, and taking advantage of new technologies.
“We’re committed to transitioning to 100 percent renewable energy in the most cost-effective way possible while ensuring reliable service,” said Ron Cox, Hawaiian Electric vice president of power supply. “We’ll continue to evaluate all options to modernize generation using a cleaner fuel to bring price stability and support adding renewable energy for our customers.”
Later on Tuesday, HEI broke from its long-standing policy of not commenting on market rumors and speculation, and said it is not in discussions with any potential suitors. On Monday, Gov. David Ige said he had been approached by more than one company looking to buy HEI. Cliff Chen, a HEI spokesman, said Monday that the company is not actively looking for a buyer.
HEI clarified its position Tuesday and said “it is in the best interests of the company and all of the stakeholders that it serves — including shareholders, customers, employees and communities — to remain independent and to work toward realizing the clean energy future and vibrant local economy we all want for Hawaii.”
“In this regard, and despite statements reported in the media about other unnamed parties rumored to be interested in acquiring HEI, the company is not currently in discussions with any other party regarding a business combination and does not intend to initiate any such discussions.”
In a Tuesday morning press conference, state Rep. Della Au Belatti (D, Makiki-Tantalus-Papakolea-McCully-Pawaa-Manoa) said management and operation issues that arose from the PUC’s review of NextEra have to be resolved in the short term and requested that state Auditor Les Kondo conduct a management and operations audit of the PUC.
Ige appointed Tom Gorak to take the place of Michael Champley as one of three commissioners at the PUC. Ige’s move came just days before the PUC was expected to rule on NextEra’s plan to buy HEI.
“The decision by the governor to replace Commissioner Champley unfortunately has undermined the integrity and independence of the regulatory process,” Belatti said.
Belatti said if other investors come forward to purchase HEI, the community should seek answers on how to make sure that those who cannot afford rooftop solar still benefit from renewable energy.
“As other investors emerge out of the woodwork, we as a community have to confront the questions of costs and how we will equitably ensure that those most unable to benefit from rich tax credits, because they are either poor or by virtue of the fact that they live in buildings like condominiums, that they are not stranded on aging utility infrastructure while others that may be richer or better situated flee from an aging grid,” she said.
Belatti leveled her criticism during a news conference when more than 20 lawmakers and members of the groups involved in NextEra’s review gathered at the state Capitol to call upon HECO to collaborate with the community as the state works to achieve 100 percent renewable energy by 2045.
“Moving forward we need to make sure all stakeholders, the utility, the governor, the Legislature and the public work together to find solutions,” said State Rep. Beth Fukumoto (R, Mililani Mauka-Mililani).
Environmentalists, clean-energy groups and representatives from solar companies joined the lawmakers. The groups tossed around ideas such as municipal ownership of the electrical utility, cooperatives or independent system operators.
State Rep. Chris Lee said the state setting aside $1.2 million of the 2017 budget to evaluate alternative utility and regulatory models would help Hawaii take the next step to understand what is next for the community.
“Nothing is off the table,” Lee said.
HECO spokesman Darren Pai said that it is clear from the 19-month review of NextEra’s bid to purchase HEI that everyone has a stake in the utility’s goal to reach 100 percent renewable energy use by 2045.
“We all need to be clearer about what we’re doing, why we’re doing it and know that when we work together, we can get to the future we all want,” Pai said. “Moving forward, there’s a lot of work to be done and everyone has a role in achieving Hawaii’s clean energy goals. We’re glad to hear people stress the importance of working collaboratively and engaging with our communities — that’s what we try to do every day.”