An expert witness testifying for Gov. David Ige’s administration in hearings on the sale of Hawaiian Electric Industries said Friday the state should look at alternatives before accepting NextEra Energy Inc.’s $4.3 billion offer.
“I have never hired the first person who walked in,” said Scott Hempling, former executive director of Maryland-based National Regulatory Research Institute and a consultant to state utility regulators.
Hempling said other potential buyers as well as other forms of ownership should be considered, including city-owned utilities and cooperatives.
“I would open the door to all,” Hempling said.
Hempling said the PUC can’t properly evaluate the benefits of NextEra because there is no other suitor to compare with the company.
“You can always compare one transaction in isolation to the status quo and say it is an improvement,” Hempling said.
Florida-based NextEra offered to buy HEI in December 2014 and is waiting on approval from the state Public Utility Commission. Hempling spoke at hearings hosted by the PUC at the Neal S. Blaisdell Center.
Hempling said that the PUC is not just tasked with a yes-or-no decision about the potential owner of the state’s electric utility, but the need to redesign Hawaii’s energy landscape.
“Your choices are not merely HECO … or NextEra,” Hempling said.
NextEra has said the merger would bring $1 billion to the state’s economy from customers reinvesting $465 million in projected savings. The savings would come from lower future costs of service and lower financing costs compared with HEI. NextEra also said that the merger would result in a $60 million credit to customers over four years and vowed to not seek a rate increase over that period of time.
Hempling said the entire plan for the state’s energy transformation should be considered, not just immediate savings.
“It’s not just about the
$60 million. It’s about the future of competitiveness in the distribution market,” Hempling said.
NextEra has said that the company would reach the state’s 100 percent renewable energy goals faster than Hawaiian Electric Co., deploy smart meters at an accelerated rate compared with HECO and provide service to customers in a more efficient manner than HEI at a lower cost.
Hempling said he spoke with Robbie Alm, former executive vice president of Hawaiian Electric Co. and an adviser to Ige, about NextEra before the PUC review process began. Hempling said Alm was opposed to the sale to NextEra because he was concerned about the outsider notion of the Florida-based company and he felt strongly that Hawaii had its own way of doing things.
NextEra said Hempling’s comments show that Alm and others close to Ige had decided to oppose the proposed sale before the review process began.
“Through his testimony today regarding his interactions with Robbie Alm, Mr. Hempling confirmed that some in the Ige administration and close to the governor had already made up their minds well in advance of the PUC review process relative to the value of this merger for Hawaiian Electric customers and the state of Hawaii,” said Rob Gould, NextEra spokesman.
Ige said in July he was opposed to the sale.
The PUC hearings, which are open to the public, continue Monday and will run until at least Wednesday.
