Hawaiian Electric Industries, the parent company of Hawaii’s major utilities, said Thursday it spent $4.9 million in the fourth quarter on preparing for its proposed sale to Juno Beach, Fla.-based NextEra Energy Inc., adding that HEI shareholders will vote on the deal in April or May.
HEI — owner of Hawaiian Electric Co., Maui Electric Co., Hawaii Electric Light and American Savings Bank — reported its fourth-quarter profit was $33.2 million, or 32 cents a share, down 15 percent from $39 million, or 39 cents a share, the year before. The drop was due to costs to upgrade electrical grids and for consultation on the utility’s energy transition plan announced in August, HEI said. For the year, the company reported a profit of $168.3 million, up 4 percent from $161.5 million in 2013.
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FOURTH-QUARTER NET
$33.2 million
YEAR-EARLIER NET
$39 million
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NextEra Energy said in December it plans to buy HEI for $4.3 billion and spin off American Savings Bank. The sale must be approved by HEI shareholders and the state Public Utilities Commission.
As part of its quarterly earnings statement, HEI gave an update on its progress in reducing the state’s dependence on imported oil for most of its energy generation. HEI said 21 percent of the electricity used by its customers last year came from renewable sources, beating the state’s goal of 15 percent renewable by 2015. The renewables allowed HEI to avoid the purchase of 2 million barrels of imported oil in 2014, which would have cost $259 million, the company said.
Hawaiian Electric said it led the nation in the use of rooftop solar with 12 percent of residential customers using photovoltaic systems.
"Our utility continued to invest in the modernization and improvement of our electric grid as we integrated more renewable energy," said Constance Lau, HEI president and chief executive officer, in a news release.
On the issue of the sale to NextEra, Lau was asked during a conference call with stock analysts whether she was concerned about getting approval from the state PUC given a recent poll that showed more Hawaii residents opposed the sale than favored it.
The Hawaii Poll, conducted for the Honolulu Star-Advertiser and Hawaii News Now, showed that nearly 34 percent of those surveyed thought NextEra’s purchase of HEI would be good for Hawaii, compared with 43 percent who thought it would not be good for the state and 23 percent undecided. The poll of 403 residents was taken Jan. 13-23.
Lau said the results were not surprising because HEI and NextEra had not explained the benefits of the purchase to customers at the time of the poll. The two companies filed an application for approval of the purchase with the PUC on Jan. 29, stating that NextEra would not raise base electrical rates for four years, saving customers $60 million.
HEI
21%
Proportion of electricity used by HECO customers that was generated from renewable sources
12%
Proportion of all HEI customers who have rooftop photovoltaic systems
$259M
Amount saved by buying less imported oil
$4.9M
Amount spent on proposed sale to NextEra Energy
Source: HEI
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"People needed more information about what the combination would bring in terms of advantages for customers, and it is quite understandable why it came out that way because the poll was actually done before the filing of the application with the Public Utilities Commission that actually outlined the benefits to customers," Lau said.
Lau repeated that she expects the sale to be approved by the PUC and to close by the end of this year.
"Overall we are making good progress and targeting to close … by year-end," Lau said on the conference call.
At the same time that it is working on the sale to NextEra, HEI has proposed changes in its rooftop solar program. The company asked the PUC on Jan. 20 to allow it to cut the reimbursement rate for new solar customers on Oahu to almost half the amount currently offered. With the proposal, the utility also announced plans to more than double the number of rooftop solar systems allowed to connect to the grid in each neighborhood.
The program would allow up to 90 percent of customers on Oahu to connect rooftop solar systems, said Lau during Thursday’s earnings call.
The company is looking into other options to change its energy mix, including utility-scale projects, community solar and liquefied natural gas, said Lau.
"We remain focused on further reducing costs for our customers with proposed grid-scale solar and wind projects. We also are working with other stakeholders to bring liquefied natural gas to Hawaii as a cleaner, lower-cost alternative to oil while we continue to aggressively pursue more renewable generation sources," Lau said.
In the fourth quarter, the utility submitted plans for seven renewable grid-scale projects totalling 220 megawatts to the Public Utilities Commission. On average the utility would pay 14 cents per kilowatt-hour for the energy produced from the independent power producers.
HECO will also be working on offering pilot projects for photovoltaic battery systems as well as adding community solar programs for people who live in condominiums, said Lau during the conference call.
HEI subsidiary American Savings Bank reported earlier it had a profit of $12 million for the fourth quarter, $200,000 lower than the same quarter last year. The bank said the decline was due to a class-action lawsuit related to overdraft fees on debit transactions, costs related to a planned headquarters in Chinatown, and capital set aside for potential loan losses.
