It wasn’t obvious at the time, but the fight two years ago over NextEra Energy Inc.’s effort to buy out the state’s largest utility was a pivotal event that instigated this year’s hard-fought Democratic primary for governor.
The high-stakes controversy galvanized many of Hawaii’s political players to choose sides — either for Gov. David Ige or against him.
Ige publicly opposed the $4.3 billion plan by NextEra to purchase Hawaiian Electric Industries Inc., saying the Florida-based energy company had failed to demonstrate an adequate commitment to the state’s goal of generating 100 percent of Hawaii’s electricity from renewable sources by 2045.
When the state Public Utilities Commission finally rejected the buyout plan, NextEra announced on July 18, 2016, it was ending its HEI merger effort. The company was left with paying a $90 million “breakup fee” as well as $5 million in other costs to HEI, a chain of events that enraged some in the business community.
That outcome helped many Hawaii environmentalists warm to Ige, but there was also a backlash.
One Hawaii business executive described the collapse of the NextEra deal as “a devastating decision for Hawaii.”
“It’s not a matter that he was against it,” said the executive, who declined to be identified. “It’s a matter that he publicly stated so at the same time the PUC was trying to make a decision on it. That’s not fair. It’s a quasi-judicial body and he should have allowed them to make the decision.
“If they came out against it, fine, but to publicly come out, it sends a chill throughout the whole business community about the ability to bring in new capital and investors to Hawaii.”
Hawaii Democratic National Committeeman Bart Dame argued in a Facebook post last month that Ige’s decision to oppose the NextEra buyout was “one of the most significant environmental decisions in recent years” because Ige rejected NextEra’s plan to use liquefied natural gas as a temporary “bridge fuel” in the state’s effort to shift to renewable power.
When Ige did that, “he angered the behind the scenes Old Boy Network investors and they asked Colleen Hanabusa to come back to Hawaii to run against Ige. They know for certain Hanabusa is their tool. But Ige is too independent,” Dame wrote.
He declined to be interviewed for this story.
Hanabusa, who represents urban Honolulu in the U.S. House, said she actually opposed the NextEra merger, although her position wasn’t widely known at the time.
Hanabusa joined the board of directors of Hawaii Gas in 2015, and was still a member when the Hawaii Gas board voted unanimously to oppose the NextEra deal, according to a Hanabusa campaign spokesman.
Hawaii Gas had its own plans to import liquefied natural gas that predated NextEra’s proposal. Hawaii Gas contends that shifting power generation to LNG would save consumers money, and the company solicited proposals from suppliers in 2014.
“My record is clear. I opposed the merger at the time and I would do so again,” Hanabusa said in a written statement. “I don’t think either the deal or the lack of a deal addressed the most important and fundamental issue: That Hawaii’s people pay more than double (for electricity) than on the mainland. Fixing that is the most important thing.
“David Ige opposed the merger but offered no solution as an alternative. The administration appears to be incapable or unwilling to do so and has established a pattern of reaction to events, rather than taking charge of them,” Hanabusa said in her statement. “This includes the lack of a cohesive plan to reach our state’s energy goals.”
When asked about the political fallout from NextEra, Ige deadpanned: “I do believe that there are those who supported the merger with NextEra that would prefer that I not win a second term.”
Ige said he wanted to be sure the deal was “in the best interest of the people of Hawaii and wanted assurances the merger would advance the state’s objective of 100 percent renewable generation of electricity.”
In the final analysis, Ige concluded that utility shareholders would benefit by being paid a premium and “executives would make out a lot, but what did they put on to the ratepayer and the people of Hawaii?”
“Look at the record,” he said. “If you look at what they put in front of the PUC as their commitment to 100 percent clean energy, they didn’t say anything.” The company promised to provide details of its plans for renewable energy after the merger was approved, Ige said.
“The commitment to the ratepayer was, ‘We promise not to raise your rates for five years,’” and no giveback, Ige said.
The governor said his administration was quite clear about what the state wanted in the merger, “and challenged the applicant to respond to that and they didn’t. They chose not to respond to most of the issues raised.”
“I do know that there were people who were very angry about the position that I took on NextEra, and they let me know about it, they felt that it was inappropriate,” Ige said.
He refused to identify who confronted him about the deal, saying those were “private conversations.”
While most voters may have forgotten about the NextEra controversy, recent reports of political donations in the governor’s race make it clear that NextEra executives in Florida and Washington, D.C., remember it well.
Since the merger plan collapsed, more than a dozen NextEra executives, including CEO James L. Robo and the company’s political action committee, have showered Hanabusa with $42,000 in campaign contributions, fueling speculation that the company plans to return to the state.
Others who were involved in the NextEra deal now also support Hanabusa, including Jennifer Sabas, former chief of staff for the late U.S. Sen. Daniel K. Inouye. Sabas was hired by NextEra in 2015 to do community outreach.
Sabas made $5,000 in donations to Hanabusa’s campaign since the NextEra deal was scrapped. She declined to be interviewed on the subject.
NextEra did not respond to questions about campaign donations to Hanabusa.
When asked about NextEra’s possible plans and political donations, Jim Kelly, Hawaiian Electric’s vice president for corporate relations, said HEI does not have an ongoing relationship with NextEra “so we’re not privy to their business plans or their political activities.”
When asked why people and entities related to NextEra are contributing to her campaign, a statement from Hanabusa pointed to her “diverse donor base” and the fact that 95 percent of donations are from individuals.
HEI executives, meanwhile, have given money to both the Ige and Hanabusa campaigns.
Ige declined to speculate why NextEra is donating to Hanabusa, saying, “I’m not certain what their interest would be in campaign contributions or supporting any of my opponents.”