Since the end of 2014, government and business leaders have been embroiled in a debate over the future of Hawaiian Electric Industries, the state’s dominant power utility.
That’s when NextEra Energy Inc., a company based in Florida, first proposed the $4.3 billion acquisition of HEI, including Hawaiian Electric Co. on Oahu, Maui Electric Co. and Hawaii Electric Light Co. on Hawaii island.
NextEra’s efforts to win over state regulators have included a long list of “binding commitments” to fulfill the state’s clean-energy policy goals.
It can and should add to that list in order to win approval of the state Public Utilities Commission. NextEra also must win over some of the powerful critics who underscore Hawaii’s unique needs as an isolated island state, one that’s been heavily dependent on imported fossil fuels for too long.
NextEra should present a greater willingness to assure more consumer options and affordability, as technologies put more green energy within reach. Its promises of “strengthening and accelerating the Hawaiian Electric Companies’ clean energy transformation” will need to be locked in with strict conditions set by the PUC.
There are arguments that weigh in its favor, primarily its capacity to rebuild much of HECO’s aging system. Its size and buying power on the market can secure power-generating fuel more cheaply to pass on to ratepayers.
And, its financial resources would be essential to the creation of the flexible power grid each island needs, one that can handle increasing amounts of renewable energy.
A year ago the state enacted a mandate to transition 100 percent to green energy by 2045. A company like NextEra with considerable financial backing would support that goal.
However, there’s been a lot of wrestling over the pros and cons. At the top of the skeptic list is Gov. David Ige. His opinion was bolstered by those from the state Office of Planning and the Department of Commerce and Consumer Affairs’ Division of Consumer Advocacy.
Ige has opposed the merger as providing, on balance, less than what the public interest requires.
About seven months after it was first proposed, Ige said he did not believe NextEra is the best partner to help Hawaii reach its energy goal. Among his many misgivings, Ige cited the company’s promotion of large-scale use of liquefied natural gas. That, he argued, is an investment in infrastructure that will not lead Hawaii away from fossil fuels, with costs passed on to the ratepayers.
Another agency that remains unconvinced is the Consumer Advocate. Its 36-page final analysis filed May 2 with the PUC, quotes Michael Brosch, an expert witness. Brosch called NextEra’s projection of savings to be “largely speculative and subject to significant future revision.”
“The truth of the matter is that it is possible that a majority of the cost reductions that (NextEra executives) attributes to the merger would be realized without the merger,” the Consumer Advocate’s statement continued.
One example of a “temporary and illusory benefit,” according to the report, was the proposed rate plan, which proposes credits starting at $6 million and, over four years, rises to $24 million.
“Then, inexplicably, after the fourth year, the rate reductions are terminated and rates are increased by $24 million, despite the fact that merger integration work should be largely completed and all real cost savings should be continuing.”
THE OFFICE of Planning was no more complimentary. It pointed to a roster of pledges NextEra made as largely promises to abide by existing state law. The agency raised concern that NextEra had not also promised to submit its future risk-taking acquisitions to the PUC to protect the consumer interest.
This deal could be saved with greater resolve from the applicant. Those pledges could be hardened up with some out-of-the-box thinking that a distinct market such as Hawaii truly needs. This state presents opportunities for innovations in the development and use of green energy, owing to its small size and an array of renewable resources.
Some community groups have laid out hurdles they would like to see cleared before PUC approval can be issued.
Among the reasonable requests: Blue Planet Foundation wants to see a program that would give customers greater control over their energy choices; greater transparency than what’s been seen to date; a new business model based on performance; and firm guarantees of immediate benefits to all.
It would also be good to see NextEra — and HECO, for that matter — move from its preferred centralized mode of energy generation, to show more enthusiasm for new approaches tailored to Hawaii’s environment.
This could be Hawaii’s historic chance to get a straight course laid, one leading to better energy self-sufficiency and affordability. The PUC still awaits a more forceful signal from NextEra that it’s the company that can get that done.
