Hawaii PUC Denies NextEra's Bid to Buy Hawaiian Electric Industries
Gov. David Ige said the 2-0 ruling "gives us a chance to reset and refocus on our goal of achieving 100 percent renewable energy by 2045."
The Hawaii Public Utilities Commission voted 2-0 on July 15 to reject NextEra Energy Inc.'s $4.3 billion bid to buy the Hawaiian Electric Companies, which supplies power to approximately 95 percent of Hawaii's population through its electric utilities Hawaiian Electric Company, Inc., Hawaii Electric Light Company, Inc., and Maui Electric Company, Limited.
PUC Commissioner Thomas C. Gorak abstained from signing the Decision and Order. In its release explaining the decision, the commission said it concluded that NextEra is fit, willing, and able to perform the services currently offered by the HECO Companies but failed to demonstrate the bid is reasonable and in the public interest. The commission said it focused on five fundamental areas of concern: 1) benefits to ratepayers; 2) risks to ratepayers; 3) applicants' clean energy commitments; 4) the proposed Change of Control's effect on local governance; and 5) the proposed Change of Control's effect on competition in local energy markets.
Hawaii Gov. David Ige issued a statement thanking the commission and stakeholders "for their participation in this historic process. This ruling gives us a chance to reset and refocus on our goal of achieving 100 percent renewable energy by 2045," he added. "The proceeding helped define the characteristics and parameters of Hawaii's preferred energy future. We look forward to creating a process to find the best partner in the world. No matter who owns the company, the energy vision for Hawaii remains very clear – 100 percent renewable energy with a transformation to a customer-centered utility focusing on smart meters, smart grid, distributed local solutions, and as much consumer choice as possible."
The commission concluded that a proposed $60 million in rate credits and four-year rate case moratorium "were conditioned on a number of events, some of which were vaguely defined," and there was an unacceptable risk that ratepayers may not ultimately enjoy the entire $60 million in rate credits, if at all, and/or the projected benefits of a rate case moratorium. And while the bidding parties claimed the proposed Change of Control would result in approximately $1 billion in statewide benefits, the commission concluded those calculations "were based on assumptions and/or unrealistic expectations about the future that were vigorously challenged in the proceeding. Additionally, Applicants had not offered any reliable means to track these estimated benefits to determine whether or not they actually occurred, nor did they propose an enforcement or penalty mechanism, in the event that such benefits did not result."
Hawaiian Electric and NextEra released a statement saying they are reviewing the PUC's order. NextEra Energy is based in Juno Beach, Fla.; its principal subsidiaries are Florida Power & Light Company, which serves more than 4.8 million customer accounts in Florida and is one of the largest rate-regulated electric utilities in the United States, and NextEra Energy Resources, LLC, which is the world's largest generator of renewable energy from the wind and sun, according to the company.