It is not by coincidence that Hawaiian Electric’s flagship offices sit across the street from Iolani Palace. Hawaiian Electric and Hawaii’s government are bound up together in Hawaii’s evolving business climate.
Now as HEI starts its possible purchase by NextEra Energy, the relationship’s future is under examination.
As Ed Greaney, former financial editor of The Honolulu Advertiser and founding editor of the Hawaii Economic Review, observed in an analysis of Hawaii business, the business climate in the islands is much about control.
As Greaney wrote, when the Big Five ran things, they had the power because they could "weave a spider’s web of interlocking corporate and family interests able to entrap the unwary commercial interloper."
The example of how Young Brothers, the Hono-lulu-based barge company that was founded in 1900 and then almost sank until it was rescued by Hawaiian Electric, pops up to show just how tightly together Hawaii is woven.
In 1986, Young Brothers was owned by Dillingham Corp., which was in the process of merging with an investment firm. Young Brothers was to be disposed of, with the possibility that it would be owned by mainland interests or just sold off, one tug at a time. HEI (Hawaiian Electric Industries) saved the day by buying local, and the vital Hawaii tug and barge company became part of a power company.
C. Dudley Pratt, of the Judd missionary family, was the HEI CEO who engineered the deal. The idea was to bring all of Hawaii’s essential services together under one corporate roof.
It was stressed that "it was important that leadership resided in the local community," said a Young Brothers description of the merger.
"We are pleased and proud to be of a strong Hawaiian corporation with a tradition of service to the people of Hawaii," enthused the company.
Pratt retired from HEI to become a trustee for the Campbell Estate and died in 2010.
The good-to-be-local feeling with Young Brothers didn’t last long. It was sold by HEI in 1999 to Saltchuk Resources, Inc., of Seattle, Wash., the parent company of Foss Maritime.
Questions might be raised about the obvious economic benefits of having a monopoly run your electric company and the major link to move goods between the Hawaiian islands, and whether it was fair.
But then it all turned a profit in the end, so why ask for trouble?
So today, the state’s historic electric company is on the verge of being absorbed by a Florida-based mega-power company.
Tugboat captain Chuck Swanson said when HEI was buying Young Brothers, "It is much better to have direct communications with our parent company."
Today those questions and many more need to be asked by local leaders.
In some ways the deal rests with the state Public Utilities Commission, but the scope of that inquiry may not be big enough for the issues facing the HEI-NextEra deal.
How will NextEra make money out of the merger? The company is vowing to lower rates — will it do that by layoffs?
How will NextEra play in the community? What sort of a corporate partner will it be? Are there assurances that HEI programs will continue?
Just as tiny Hawaii is part of the global economy, the question must be asked: How does NextEra value becoming part of the Hawaiian economy?
Richard Borreca writes on politics on Sundays, Tuesdays and Fridays. Reach him at rborreca@staradvertiser.com.
