The state Public Utilities Commission proceeding regarding the proposed change of control of HECO (Hawaiian Electric Co.) is of vital importance to every person living in Hawaii.
As local business leaders, we see reasons to be enthused yet apprehensive about that proposed change.
The state PUC has a historic opportunity to reform the public franchise granted to HECO. This could yield significant economic benefits, if the monopoly that HECO currently holds on electrical power generation is dispersed to facilitate a distributed-generation model.
The new world of electrical power generation no longer requires that a single entity control all generation and transmission in a vertically integrated monopoly.
New companies feeding into the power grid controlled by HECO would diversify our electrical power supply base and bring new capital sources to finance their activities.
Several renewable energy companies have already expressed eagerness to enter our marketplace with their alternative technologies.
That prospect would auger well for Hawaii’s future by creating new quality job opportunities and diversifying our economy. Such a scenario would position Hawaii to truly become a leader in renewable energy development.
But this vision can only be realized if the current monopoly that HECO holds is modified to facilitate new investments by a diversity of players. That is why the PUC faces a momentous challenge in crafting the conditions under which a company like NextEra should be allowed to take control of HECO.
Nonetheless, we remain apprehensive about the sale of Hawaii’s largest company and our most important utility to a Florida-based conglomerate like NextEra. The history of Hawaii-based companies being acquired by offshore buyers has been full of unfulfilled promises. Frequently, the acquirers are huge companies with grand ambitions for growth fueled principally through mergers and acquisitions. Acquired companies have seen their assets dispersed or run-off and their workforce restructured and drastically reduced as buyers look for ways to pay for their purchases.
Names like Amfac, Castle &Cooke Inc., C. Brewer &Co., Hawaiian Telephone Co., Honfed Savings, Pacific Insurance Company, Pacific Resources Inc., Spencecliff Corp. and Theo H. Davies &Co. are representative of that pattern.
These local businesses were once important sources of thousands of jobs and valuable business relationships that were lost. Our community also lost major sources of corporate giving and community leadership.
Today these names are a few reminders of how offshore investors with seemingly strong financial resources and purported good intentions sooner or later move on to other priorities to fill their corporate appetites and investor demands.
The sale of HECO would not be a run-of-the mill corporate acquisition. It would involve the transfer of the public franchise and monopoly that was granted by King Kalakaua over 125 years ago.
He relinquished the sovereign right to control that franchise to provide benefits to the citizens of Hawaii.
The shareholders of HEI (Hawaiian Electric Industries) will undoubtedly receive a generous premium from the sale of the public franchise.
Whether that premium should be solely theirs or shared with HECO’s ratepayers is subject to debate.
However, one thing is certain: All of us who call Hawaii home will be looking to the PUC to ensure that when it approves the acquisition, it does so with appropriate safeguards so the history of disappointment with corporate change of control is not repeated.
