Gov. David Ige maintained his opposition Tuesday to NextEra Energy Inc.’s proposed buyout of Hawaiian Electric Utilities after the top executive at the Florida-based company’s subsidiary said earlier in the day that most of the governor’s reasons for opposing the sale “do not stack up.”
Eric Gleason, president of NextEra Energy Hawaii LLC, advocated for the company’s $4.3 billion proposed purchase of HEI while addressing members of the Hawaii Food Industry Association during a general meeting at the Honolulu Country Club. The sale is currently under review by the state’s Public Utilities Commission and needs the agency’s approval to close.
“I follow very carefully Gov. Ige’s pronouncements on the merger,” Gleason said. “I have met with him a number of times. … Respectfully, most of the reasons he gives, and they’ve changed over time … but, respectfully, I think most of the things he has said do not stack up to the evidence in the case. The one thing he said that I can’t argue with is that we are not from here. I’ve come to the conclusion that that is a big factor for him.”
Ige came out against the sale in July, saying he was opposed to NextEra’s application because of its lack of detail. The governor said he is looking for a partner to align with the state’s renewable energy goals and an electric company that sees Hawaii as the center of its work.
When reached late Tuesday afternoon, Ige said he was still opposed to the sale because NextEra doesn’t offer enough commitments that specifically address the state’s clean energy transformation.
“The numerous commitments proposed by NextEra lack detail and any enforcement mechanisms and are mostly conditional,” Ige said. “Unfortunately, very few address our clean energy transformation, which is a key priority of my administration. Even if the commitments were unconditional, it is not clear how these would provide any added value or benefit to Hawaii that are directly related to the merger.”
NextEra’s commitments include $60 million in customer savings over four years after the sale closes, accelerating the state’s clean energy goals, deploying smart meter technology to customers and no involuntary layoffs for at least two years after the sale closes.
“The conditional nature is a risk to ratepayers because benefits of the merger are not certain to materialize and, even if they do materialize, they may not do so for a number of years,” Ige continued. “The benefits to NextEra shareholders, on the other hand, will be upfront and substantial. From the start, it has been the obligation of (HEI and NextEra), not the Public Utilities Commission nor intervenors, to address these issues and to date, NextEra hasn’t done so. Therefore, I remain opposed.”
At the HFIA membership meeting, Gleason said NextEra is the right partner for Hawaii because NextEra was able to transform from its utility being the largest consumer of oil in the industry to one that doesn’t use oil at all.
“We used to be the biggest consumer of oil in the industry,” Gleason said. “We used to burn, as recently as 15 years ago, we were burning four times as much oil as Hawaiian Electric. We eliminated that mostly by moving to natural gas and saving our customers money at the same time.”
He added: “Today Hawaiian Electric burns as much oil to make power as the rest of the U.S. power industry put together. We used to be much bigger oil burners and made that go away.”
NextEra’s Florida utility, Florida Power and Light, generates most of its electricity from natural gas facilities and nuclear power plants. Ige said he is opposed to the use of liquefied natural gas for power generation.
Gleason said NextEra’s history of transitioning off oil use and the utility’s low electric rates — roughly 9.3 cents per kilowatt-hour — show that its partnership with HECO makes sense.
“You’ve got this high price of electricity,” he said. “You’ve got the desire to get off of oil because of the price … and you’ve got incredible prolific renewable energy resources. We looked at it and we look at some of the capabilities we have in our company and we thought Hawaii is a place we have to spend more of our time trying to figure how we can put capital at work and help the state.”
Gleason said the company underestimated the challenge of proving the company’s purchase of HEI was in the public interest for the state when announcing the intent to purchase in December 2014.
“We kind of had persuaded ourselves that the logic was just so obvious,” Gleason said. “We knew there was some history about mainland companies coming here. … We definitely underestimated how challenging it would be.”
Those that oppose the sale include the state Consumer Advocate; the state Office of Planning; the state Department of Business, Economic Development &Tourism; and the Sierra Club of Hawaii. Involved in the sale’s review are 25 local groups, including the state Consumer Advocate.
Solar industry advocates have been some of the most outspoken against the sale because of NextEra’s track record of low solar adoption in Florida.
Gleason acknowledged the low penetration of rooftop solar in NextEra’s Florida territory — 3,500 net energy metering customers out of 4.8 million customers — but said the company supports solar.
“It’s a tiny percentage,” Gleason said. “If they want it, they got it. We don’t stand in the way of our customers if they want it.”
Gleason said the reason solar advocates oppose the sale is because their businesses are threatened by lower power.
“We do everything we can to lower the price of power,” he said.
Gleason said that customers in Florida’s territory just don’t want solar because of the low rates.
He said NextEra supports the PUC’s decision to end net energy metering, the program that credits solar owners for the excess energy their solar systems bring to the grid, because it was “too rich of a deal.”
“We are always going to advocate for things that are fair to all customers — everything we believe is very aligned with public policy here in the state,” Gleason said.
When asked about executive compensation at HEI, Gleason said payment for the company’s employees is normal. HEI CEO Connie Lau is expected to walk away from the sale with $11 million in compensation. Gleason said most executives in the industry are compensated at least two to three times their annual salary.
“Customers aren’t paying for it,” he said. “Shareholders are paying for it.”
