The state Public Utilities Commission has approved a request by NextEra Energy Inc. to add 10 new commitments to the 85 it previously made to win support for its proposed purchase of Hawaiian Electric Industries.
In an order made public Tuesday, two of the three PUC commissioners approved the new commitments, with PUC Chairman Randy Iwase voting against approval.
The new commitments include meeting a higher percentage of electricity generated from renewable energy at interim benchmarks of the state’s 100 percent renewable energy law than currently in place; installing a voting board of directors with a majority of members being Hawaii residents; making “good faith” efforts to develop employees from within Hawaiian Electric Cos. to fill executive vacancies at the utility; and maintaining Hawaii’s electric utilities’ finances independently from NextEra and the parent company’s affiliates.
Florida-based NextEra offered in December 2014 to buy HEI for $4.3 billion and spin off its banking subsidiary, American Savings Bank. The deal has been approved by the companies’ shareholders but must be approved by the PUC before it can close. The PUC is expected to make a decision later this year.
NextEra’s 10 new commitments came from an agreement between NextEra and the U.S. Department of Defense and were submitted to the PUC on Nov. 27, the same day the Department of Defense submitted a motion to withdraw from the proceeding. Nov. 27 was also the last business day before the PUC began its trial-like hearings on the NextEra deal.
Iwase said he broke from the other commissioners because NextEra submitted the commitments too late in the process, which prevented the state Consumer Advocate and other groups involved in the hearings from preparing questions based on the new commitments.
“With the evidentiary hearings set to begin at 9:30 a.m. the following workday, there was no reasonable means by which the parties could file any responses to these motions,” Iwase said.
The agreement between NextEra and the Defense Department changed the commitments “at the eleventh hour without any notice of opportunity for debate by the parties, and in disregard of the commission’s pre-hearing orders,” Iwase wrote in his dissent.
The deadline for submitting testimony in the hearings was Nov. 16.
Iwase also said NextEra’s offer of additional benefits late in the process proves that the original proposal by NextEra was not its best offer.
“The time for applicants to present their ‘best and final offer’ should have occurred during the discovery period so as to avoid the complications now raised,” Iwase said. “If applicants are free to continually modify their commitments, this undermines the certainty of this proceeding.”
Iwase said the late submission raises questions about the NextEra’s view of the PUC’s proceeding.
“Is it a judicial process or just old-fashioned political horse trading?” Iwase asked. “Such gamesmanship is not helpful to the commission in deciding whether this proposed merger is in the public interest.”
Commissioners Michael Champley and Lorraine Akiba approved the new NextEra commitments, saying they are relevant to the case and should be considered by the PUC in its decision.
The PUC also said it will allow all the parties involved in the case a chance to question NextEra about the new commitments at future hearings.
The PUC may call President and CEO of NextEra Energy Hawaii Eric Gleason back to the stand to discuss changes when the hearings resume Feb. 1.
All three commissioners rejected the Defense Department’s request to withdraw from the review of NextEra’s purchase of HEI.
“The commission concludes that it would be inequitable to allow DoD to simply withdraw at this time,” the order said. “Rather, the commission believes that the Consumer Advocate and the remaining intervening parties should have the opportunity to learn what discussions and considerations, if any, led to (NextEra’s) and the DoD’s agreement to revise and add to the existing merger commitments at this time.”
